While some banks are clearly going far beyond their commitment to the Equator Principles, other are still failing to meet the requirements. This begs the question as to whether the Equator Principles really are the industry best practice, when individual banks have policies and procedure that go far beyond the principles.
The Banktrack report identified the main weaknesses in the banks approaches as being inadequately robust policies and a lack of transparency.
The Report has been commented for its maturity and objectivity by Paul Watchman – Partner at international law firm Freshfields Bruckhaus Deringer
A new study released by BankTrack and WWF today has found that there is a growing commitment to sustainable banking within the international banking sector. However, the report also highlighted the need for the sector to adopt more transparent financing policies, advancing sustainability while helping to reduce their exposure to risk.
The report, Shaping the Future of Sustainable Finance: Moving the Banking Sector from Promises to Performance, ranked the financing policies of 39 international banks across 13 issue areas, from climate change to human rights. The study also benchmarked the banks’ policies against international norms, and found that banks are failing to uphold environmental and social standards developed by UN agencies and other international bodies.
Of the 39 banks surveyed, the report only found two cases where bank policies meet all or most of the relevant international standards or best practices, Rabobank’s adoption of the UN Draft Norms on Human Rights and HSBC’s adoption of the World Commission on Dams standards. The study also found that no bank has standards for fisheries and agriculture; only one bank has a policy specifically for dams (HSBC), extractive industries (ABN AMRO) and chemicals (HSBC); and that the vast majority of banks have no human rights guidelines.
“This report shows the Equator Principles clearly cannot be considered best practice,” said Michelle Chan-Fishel of Friends of the Earth – US, who noted that banks adopting only the Equator Principles earned lower-than-average rankings. “First, the Equator Principles have always been weak in some areas, such as human rights. Second, this report identifies several examples where individual banks’ environmental and social policies go far beyond the Equator Principles in substance and scope.”