Banks failing environment and social standards
26 Jan 2006, London, UK – A new study released by WWF and BankTrack 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.
“This report shows that while there has been some good work done by a few of the banks to develop policies there is still a long way to go,“ said WWF-UK Chief Executive Robert Napier. ”The lack of transparent policies can not only result in over-exploitation of environmental goods such as fisheries and forests as well as increased financial risk to the banks, resulting in transactions being jeopardised.”
One of the foundations of sustainability is transparency and the report found a near total lack of publicly available information. The world has moved on from “trust me” to “show me” and without transparency even the more progressive banks leave themselves vulnerable to charges of “greenwash”.
“The first step on the way to sustainable banking is to increase the transparency of the banks’ policies,” said Jules Peck, WWF’s Global Policy Officer. “This report clearly sets out international standards for 13 issue areas and acts as a challenge to the banks to improve their performance. Even the two highest ranking banks overall, HSBC and ABN-AMRO, generally have vaguely worded policies, which include limited commitments, and fail to meet international standards.”
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 study shows that the banks have some real blind spots when it comes to sustainability. Only eight banks – or 20 per cent of those surveyed – have a human rights policy, which is a huge gap given the importance of this issue,” said Johan Frijns, coordinator of BankTrack, an international network of advocacy NGOs monitoring the finance sector.
“Before the banking sector congratulates itself too much for its successes, it should take a hard look at this report and tackle those problem areas where progress is urgently needed.”
• The banks surveyed were: ABN AMRO, Banco Bradesco, Banco de Brasil, Banco Itaú, Barclays, BBVA, BNDES, BNP Paribas, Bank of America, Calyon, CIBC, Citigroup, Credit Suisse Group, Deutsche Bank, Dexia, Dresdner Bank, HBOS, HSBC Group, HVB Group, ING Group, JP Morgan Chase, KBC, Korean Development Bank, Manulife, MCC, Bank of Tokyo-Mitsubishi, Mizuho Financial Group, Rabobank Group, Royal Bank of Canada, Royal Bank of Scotland, Scotia Bank, Société Général, Standard Chartered Bank, Sumitomo Mitsui Financial Group, UBS, Unibanco, Wells Fargo, West LB, and Westpac.
• BankTrack is a global coalition of non-governmental organizations (NGOs) including WWF-UK, Friends of the Earth, the Rainforest Action Network and the Berne Declaration. It promotes sustainable finance in the commercial sector, and its vision for a sustainable finance sector was expressed in the Collevecchio Declaration of January 2003. Now endorsed by more than 200 organisations, the Collevecchio Declaration remains the benchmark by which civil society will measure the banking sector’s commitment to sustainable development.
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