New EBRD Performance Requirements

September 22, 2008

The European Bank for Reconstruction and Development (EBRD) new environmental and social policy was approved on 12 May 2008.

The policy has more explicit social provisions. In some areas, the EBRD’s requirements exceed IFC’s requirements. This includes EBRD’s reference to obtain a “consent” where operations are located in areas with indigenous populations. Reflecting its membership, EBRD also refers to a number of European provisions related to the Aarhus Convention on Public Participation and the EU EIA Directive.


2008 FT Sustainable Banking Awards

March 31, 2008

There have been a record number of entries for the FT Sustainable Banking Awards this year, with 128 institutions in 54 countries submitting a total of 181 applications

The awards were created by the Financial Times and IFC, a member of the World Bank Group, to recognise banks and other financial institutions that have shown leadership and innovation in integrating social, environmental and corporate governance considerations into their operations.

The winners of the awards will be announced at a special dinner at the Dorchester in London on 3 June 2008.


Minimum Requirements for Equator Principle Reporting and one year of EPII Implementation and

September 17, 2007

A template which sets out the minimum reporting requirements for EPII has also been released. This covers:

  • An annual report;
  • The number of projects screened each year;
  • The category and number of projects reviewed;
  • A discussion on EP implementation (although the scope of this is completely up to the bank concerned).
  • The template also contains suggested formats for providing regional and sectoral information, but this is not obligatory.

The template certainly is minimal and unsurprisingly many organisations and shareholders will be expecting the banks to provide substantially more information than is set out in the requirements. Many EP banks are already providing far more information and are setting an excellent example for those that have signed up to the principles more recently.

On May 14, 26 out of 51 EPFIs met to discuss lessons learned and challenges related to EPII implementation.

6 recent adopters attended the event and made a significant contribution to the success of the meeting. EPFIs have been implementing the new Principles for nearly one year following their revision and launch in London last July. Bank of America hosted the day-long event in Washington, DC. Issues related to EPFI governance, disclosure and transparency related to Principle 10, and other items were discussed. This EPFI meeting was then followed by a 2-day series of meetings at the International Finance Corporation (IFC’s) “Community of Learning” event which focused on lessons learned from application of the IFC Performance Standards. EPFIs interacted with and heard from IFC senior management and staff, and also had the opportunity to interact with a number of environmental representatives of Development Finance Institutions (DFIs) from across the globe.


New IFC Report – Banking on Sustainability (March 2007)

March 30, 2007

A new IFC report “Banking on Sustainability,” has been released.  It provides practical examples of 14 financial institutions in 12 countries that have taken concrete steps to integrate sustainability into their policies, practices, products, and services.

“While detailing the evidence of potential benefits for banks in integrating sustainability into their business strategy, the report reveals a dramatic shift in banks’ awareness of these benefits,” said Rachel Kyte, IFC Director of Environment and Social Development.

In a 2005 IFC survey, 86 percent of 120 financial institutions interviewed reported positive changes as a result of steps they had taken to integrate social and environmental issues in their business.The report shows evidence of the potential benefits of adopting sustainability as a business strategy. It also shows a dramatic shift in banks’ awareness of these benefits. Banks can tap vast benefits by reassessing their business practices and engaging in sustainability-oriented risk management and product development.

It is notoriously difficult to quantify the financial benefits of adopting sustainable business practices, however this report demonstrates some clear business benefits from adopting and integrating environmental and social considerations into core business strategies.


IFC Guidance to the Private Sector on Indigenous and Tribal Peoples

March 14, 2007

March 13, 2007- The International Finance Corporation (IFC) announced today the release of a new IFC publication, “ILO Convention 169 and the Private Sector: Questions and Answers for IFC Clients.”

The ILO Convention 169 and the Private Sector (PDF, 90kb) publication is intended as a practical guide for IFC clients who operate in countries that have ratified Convention 169 on Indigenous and Tribal Peoples. It is the first guidance of its kind written for the private sector in relation to Convention 169 which is directed at governments. IFC prepared this publication, in close consultation with the ILO, in response to the experiences that IFC has had in recent years with private investments affecting indigenous peoples and their lands in Latin America.

IFC hopes this publication will help to raise awareness about the Convention and its possible implications for private sector companies, and provide added clarity and guidance for IFC clients. The publication should be read in conjunction with IFC’s Performance Standard on Indigenous Peoples.


Outlining the labour components of the revised Equator Principles

October 18, 2006
Extract from ELDIS:
Ergon / Ergon , 2006
This briefing paper outlines the labour components of the revised Equator principles – Equator II – to assist signatories, their clients and other stakeholders in understanding the new requirements. It introduces the new Equator Principles, which are based on a revised version of IFC Performance Standards – provisions on labour standards and provides an overview of the issues financial institutions must now address. It also suggests some steps they must take to operationalise the new requirements.Until now, the labour component of the IFC policies referenced by the Equator Principles has been limited to occupational health and safety and avoidance of harmful child labour and forced labour. The new IFC Performance Standard 2 (PS2), covers a range of new issues such as non-discrimination, freedom of association and non-employee workers, and also introduces a new set of processes that must be followed.Highlights of the PS2 include:

  • there must be a human resources policy covering terms and conditions and other rights at work
  • all employees must be informed of their terms and conditions and entitlements
  • collective bargaining agreements must be respected, or if not in place, terms and conditions of work must be reasonable and, at minimum, comply with local law
  • the rights to freedom of association and collective bargaining must be respected
  • if rights to freedom of association are restricted in law, clients will enable alternative means for the expression of worker rights
  • projects must not use forced labour
  • projects must not employ children in economically exploitative or hazardous ways, and national laws must be complied with
  • if a significant number of jobs will be lost a retrenchment plan must be drawn up based on non-discrimination and consultation
  • there should be a confidential grievance mechanism
  • workers must be provided with a healthy working environment
  • sub-contracted workers are covered by most of these provisions

The brief argues that the new Equator Principles have the potential to improve conditions for many workers, but the procedures required for assessing risk and the issues that must be considered will be unfamiliar to most private sector banks – as will the possibility of engaging with wider stakeholders, such as trade unions.


Investment in emerging markets – opportunities for risk management and sustainability

October 2, 2006

Until the last few years, the conventional view towards investing in emerging markets was that sustainability considerations too often appeared subordinate to the quest for economic growth. Emerging markets are now seen by many in the investment community as a place where good rewards can be earned.
EIRIS had just completed a review of the opportunities for responsible investment in emerging markets, which reveals the possibilities for diversification and risk management for investors as well as wider potential gains for sustainability.

The report identifies factors hindering Socially Responsible Investment in emerging markets:

  • perceived lack of consistent and widespread good corporate governance
  • continuing government ownership and control such as with many large listed Asian companies that can be a critically important variable in Environmental and Social Governance performance
  • the retention of large controlling interests by families in many emerging market companies that limit the rights and influences of minority shareholders.
  • even where governance, environmental or labour regulations are strong in some countries, enforcement is sometimes weak.
  • doubts about the honesty of some disclosed information or its credibility. For instance, in relation to ISO14001, the reputation of those providing the certification is crucial for trusting the information disclosed.
  • difficulties in engaging with companies in emerging markets. Although language may be a factor in some cases, the corporate culture of many companies is not yet responsive or attuned to international investors especially relating to environmental and social issues.
  • a limited number of third party organisations in these countries or regions to undertake the research required on companies. The Iinternational Finance Corporation is undertaking initiatives to facilitate and increase this research capacity.