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Banking Sector Not Upholding International Norms on Environment U.S. Banks Rank Well Overall, But Do Not Lead the Pack

Posted Nov. 3, 2008 / Posted by: admin

(Davos, Switzerland)  A new study released by BankTrack and the World Wildlife Fund (WWF) yesterday found that banks are facilitating the over-exploitation of environmental goods such as fisheries and forests. The study also found that banks are not doing their part to protect human rights by failing to uphold international norms such as the Food and Agriculture Organization’s Fisheries Code, or the UN Norms on the Responsibilities of Transnational Enterprises with Regard to Human Rights. (BankTrack is an international network of advocacy NGOs monitoring the finance sector).

The report, Shaping the Future of Sustainable Finance: Moving the Banking Sector From Promises to Performance, ranked the environmental financing policies of 39 international banks across 13 issue areas, from transparency to climate change.  The study also compared the banks’ policies against international criteria, and found that banks are failing to uphold environmental and social standards developed by UN agencies and other international bodies.

The report concludes that (as of September 2005) among U.S. banks, the financing policies of JPMorganChase, Citigroup and Bank of America respectively placed 1st, 2nd, and 3rd.   The three banks’ policies rank 3rd, 5th , and 6th when compared with international competitors.  Wells Fargo fared the worst among U.S. banks surveyed, earning a lower-than-average overall score.

“In the past several years, U.S. banks have shown that they are very adept at copying each others’ policies, but they aren’t very good at leadership at the international level,” said Michelle Chan-Fishel, program manager for Friends of the Earth-U.S. (co-founder of BankTrack).  “But more important than comparing banks’ policies against each other, is comparing the policies against international norms – and that’s where we see a real deficiency.”

Among the 39 banks surveyed, the study found that although many banks have developed new environmental policies in the last few years (e.g. Equator Principles in 2003, new environmental commitments from JPMorganChase and Goldman Sachs in 2005), no bank has standards for fisheries and agriculture; only one bank has a policy specifically for dams (HSBC), extractive industries (ABN AMRO) or 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,” said Johan Frijns, coordinator of BankTrack. “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 the banks need to strengthen their environmental and social lending policies.”

The study is a reality check for the banks which have adopted the Equator Principles, a set of project finance policies based on the International Finance Corporation standards, which are largely regarded as an indicator of environmental responsibility in banking.  However, banks adopting only the Equator Principles earned lower-than-average rankings.

In addition, the report found that there was a near total lack of publicly available information on how banks were implementing these policies, preventing the authors from assessing bank’s compliance with their policies.

“The first step on the way to sustainable banking is to increase the transparency of the banks’ policies,” said Jules Peck, Global Policy officer for WWF, who also noted that the world has moved from a “trust me” to a “show me” environment.

“Strong policies on paper are good, but without environmental management systems to back them up, the commitments are hollow,” added FOE’s Chan-Fishel.  “For example, on paper Bank of America’s environmental policies may be competitive with those of their peers, but I’m concerned about B of A’s capacity for implementation, given their few environmental staff.” FOE, along with interested shareholders, will be meeting with Bank of America in early February to discuss the matter.

 

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Editor's notes

The report can be found at www.banktrack.org

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,Westpac

BankTrack is a global coalition of non-governmental organizations (NGOs) including Friends of the Earth–U.S., WWF-UK, the Rainforest Action Network and the Berne Declaration. It promotes sustainable finance in the commercial sector. BankTrack’s vision for a sustainable finance sector was expressed in the Collevecchio Declaration of January 2003. Now endorsed by more than 100 organizations, the Collevecchio Declaration remains the benchmark by which civil society measures the banking sector’s commitment to sustainable development.

 

For further information, please contact:

Michelle Chan-Fishel, Friends of the Earth
m: +41 76 5582 131 (until 1 February 06), t: +1 415 544 0790 x14 (afterwards), e: mchan@foe.org

Johan Frijns, BankTrack
t: +31-30-2334343, e: coord@banktrack.org

Jules Peck, WWF
m: + 44 7766 150944, e: jpeck@wwf.org.uk
 

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