[A-List] Socially responsible imperialism

["Michael Keaney" <michael.keaney@xxxxxx>]

Banks sign up to emerging market finance accord
By Demetri Sevastopulo in Washington
Financial Times: June 4 2003

Nine major banks from seven countries will on Wednesday adopt guidelines for
project finance in emerging markets, in the first industry-wide attempt to
encourage socially responsible lending.

The so-called "Equator Principles" from the International Finance
Corporation, the private-sector arm of the World Bank, were drafted in
collaboration with ABN Amro, Barclays, Citibank and WestLB.

Five other banks - Credit Lyonnais, Credit Suisse First Boston, Westpac
Banking Corporation, Rabobank and HVB - have also agreed to commit to the
principles. In 2002, the nine banks underwrote $12bn in project finance,
according to consultancy Dealogic.

The principles require the banks to adhere to the IFC's social and
environmental rules for sustainable development, which include guidelines on
issues ranging from environmental assessment and natural habitats to
indigenous peoples and child labour.

"The adoption of these principles by the private sector marks a profound
victory for sustainable development," said Peter Woicke, executive vice
president of the IFC and managing director of the World Bank.

According to a copy of the principles obtained by the FT, the banks will
"not provide loans directly to projects where the borrower will not or is
unable to comply with our environmental and social policies and processes".

Chris Bray, head of environmental risk management at Barclays said: "We
already have robust procedures in place but the Equator Principles allow us
to make a formal statement about what we are doing. We hope that this is
leading by example."

Royal Bank of Scotland, ING Barings, NordLB and ANZ are also understood to
be close to accepting the principles, which the banks hope will become the
standard for the project finance industry.

While each bank will be responsible for monitoring and enforcing compliance,
the IFC will act as a consultant, in many cases training their staff.

In addition to working with the IFC, the lenders consulted international
environmental non-government organisations to ensure the agreement will be
welcomed by the environmental community, which has become increasingly vocal
about the involvement of banks in controversial projects such as the Three
Gorges dam in China.

The NGOs recommended that the principles, which were initially called the
"Greenwich Principles", be renamed because the term was too Anglo-centric.

Private banks have until recently been largely immune to the wrath of
environmental groups, which tended to focus on companies operating
sweatshops in developing countries. But at the last World Economic Forum in
Davos more than 100 advocacy groups signed the so-called Colleveccio
Declaration, calling on financial institutions to implement more socially
and environmentally responsible lending policies.

The move by the private banks is also expected to ratchet up pressure on
European export credit agencies to be more vigilant about funding
environmentally questionable projects.