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February 24, 2006
New report emphasizes need for banks to improve environmental, social accountability
In the past, most major commercial and investment banks did not consider environmental and social concerns relevant to their operations. Today, however, the sector banks are beginning to view these issues as critical to the proper management of transaction, portfolio and reputational risks.
In 2002, a global coalition of non-governmental organizations came together to form BankTrack, whose vision for a sustainable finance sector was expressed in the Collevecchio Declaration of January 2003. Endorsed by more than 200 organizations, the declaration remains the benchmark by which civil society measures the banking sector’s commitment to sustainable development.
A new report titled Shaping the Future of Sustainable Finance: Moving from Paper Promises to Performance, reviews the environmental and social policies of 39 banks from around the world. The banks were chosen because of their high visibility and global reach, their important presence in global project finance markets, and/or their endorsement of the Equator Principles.* The report provides detailed analyses of how these banks’ policies compare with each other and with international rights, standards and best practices. It also recommends adopting an environmental management system that includes determination of key environmental and social exposures, impacts and risks of funded projects, and the development of overall environmental and social policies for the bank's approach to project funding.
In 2005, the Mott Foundation provided $150,000 in general support to BankTrack, which helped co-fund the report.
[*The Equator Principles provide a framework for banks to review, evaluate and mitigate or avoid environmental and social impacts and risks associated with projects they finance. The Principles are based on the International Finance Corporation’s (IFC’s) environmental and social safeguard policies.]
Additional Resources
- Click here to view the report in its entirety in PDF format.
- Click here to view an executive summary of the report.
- Click here to read a related article about the Equator Principles in a recent edition of Mott Mosaic.