[PEN-L:33362] Declaration of war by FOE against financial institutions

[Chris Burford <cburford@xxxxxxxxxx>]

From  stop-imf mailing list 
stop-imf@xxxxxxxxxxxxxxxxxxx 
http://lists.essential.org/mailman/listinfo/stop-imf

The following ringing declaration challenging the "social license" of financial institutions to operate, globally, is drafted with a desire to attract the signature of other organisations. Can any of you pass it on?

--PLEASE FORWARD--

ORGANIZATIONAL SIGN-ONS NEEDED

INTERNATIONAL DECLARATION CALLING FOR BIG BANKS AND INVESTORS TO 
SUPPORT PEOPLE OVER PROFITS!

This statement was drafted by an international group of NGOs 
campaigning on investment banks. It represents one of the first 
broad-based calls for private financial institutions (big banks, 
investment funds, etc.) to put people before profit; and it 
challenges them to take responsbility for their role in the debt 
crisis, in funding controverisal projects, and in backing the Bretton 
Woods Institutions' neo-liberal economic agenda. It will be launched 
at World Econnomic Forum in Davos, Switzerland on January 27, 2003.
To sign on, send an email with your organization and country to 
droosesnyder@xxxxxxx by 25 January 2003.

To see concrete steps that financial institutions can take to 
implement this declaration, go to 

www.foe.org/camps/intl/declaration.html.

*****************************************

COLLEVECCHIO DECLARATION 
ON FINANCIAL INSTITUTIONS AND SUSTAINABILITY

Financial institutions (FIs) such as banks and asset managers can and 
must play a positive role in advancing environmental and social 
sustainability. This declaration calls on FIs to embrace six 
commitments which reflect civil society's expectations of the role 
and responsibilities of the financial services sector in fostering 
sustainability. The following civil society organizations call on 
FIs to embrace the following commitments, and take immediate steps to 
implement them as a way for FIs to retain their social license to 
operate.


The Role and Responsibility of Financial Institutions 

The financial sector's role of facilitating and managing capital is 
important; and finance, like communications or technology, is not 
inherently at odds with sustainability.
However, in the current context of globalization, financial 
institutions (FIs) play key roles in channeling financial flows, 
creating financial markets and influencing international policies in 
ways that are too often unaccountable to citizens, and harmful to the 
environment, human rights, and social equity.

Although the most well-known cases of resource misallocation in the 
financial sector have been associated with the high tech and telecom 
bubbles, FIs have played a role in irresponsibly channeling money to 
unethical companies, corrupt governments, and egregious projects. In 
the Global South, FIs' increasing role in development finance has 
meant that they bear significant responsibility for international 
financial crises, and the crushing burden of developing country 
debt. However, most FIs do not accept responsibility for the 
environmental and social harm created by their transactions, even 
though they may be eager to take credit for the economic development 
and benefits derived from their services. And relatively few FIs, in 
their role as creditors, analysts, underwriters, advisers, or 
investors effectively use their power to deliberately channel finance 
into sustainable enterprises, or encourage their clients to embrace 
sustainability.

Similarly, the vast majority of FIs do not play a proactive role in 
creating financial markets that value communities and the 
environment. As companies FIs concentrate on maximizing shareholder 
value, while as financiers they seek to maximize profit; this dual 
role means that FIs have played a pivotal role in creating financial 
markets that predominantly value short-term returns. These brief 
time horizons create intense pressure for companies to put short-term 
profits before longer-term sustainability goals, such as social 
stability and ecological health.

Finally, through the work of international public policy bodies such 
as the Bretton Woods institutions, the power of FIs has increasingly 
expanded as countries have deregulated, liberalized, and privatized 
their economies and financial markets. Financial institutions have 
not only actively promoted these policies and processes, but they 
have benefited from them through increased profit and influence.
In too many cases, FIs have unfairly benefited at the expense of 
communities and the environment. For example, during financial 
crises, many FIs charged high risk premiums to indebted countries, 
while at the same time benefiting from public bail-outs. Some FIs 
have spoken out against innovative solutions to the debt crisis, such 
as the sovereign-debt restructuring processes proposed by civil 
society groups and now being discussed in the International Monetary 
Fund. And FIs' voices have been absent in efforts to address tax 
havens, a problem that blocks progress towards equity and 
sustainability.

As a result, civil society is increasingly questioning the financial 
sector's accountability and responsibility, and challenging FIs' 
social license to operate. As major actors in the global economy, 
FIs should embrace a commitment to sustainability that reflects best 
practice from the corporate social responsibility movement, while 
recognizing that voluntary measures alone are not sufficient, and 
that they must support regulations that will help the sector advance 
sustainability.

Six Commitments to Key Principles 

Acknowledging that FIs, like all corporations, exist at the behest of 
civil society to act in the public interest, FIs should promote the 
restoration and protection of the environment, and promote universal 
human rights and social justice. These principles should be inherent 
in the way that they offer financial products and services, and 
conduct their businesses.

Finance and commerce has been at the center of a historic detachment 
between the world's natural resource base, production and 
consumption. As we reach the boundaries of the ecological limits upon 
which all commerce relies, the financial sector should take its share 
of responsibility for reversing the effects this detachment has 
produced. Thus, an appropriate goal of FIs should be the advancement 
of environmental protection and social justice rather than solely the 
maximization of financial return. To achieve this goal, FIs should 
embrace the following six commitments:


1. Commitment to Sustainability 

FIs must expand their missions from ones that prioritize profit 
maximization to a vision of social and evironmenmental 
sustainability. A commitment to sustainability would require FIs to 
fully integrate the consideration of ecological limits, social equity 
and economic justice into corporate strategies and core business 
areas (including credit, investing, underwriting, advising), to put 
sustainability objectives on an equal footing to shareholder 
maximization and client satisfaction, and to actively strive to 
finance transactions that promote sustainability.


2. Commitment to 'Do No Harm' 

FIs should commit to do no harm by preventing and minimizing the 
environmentally and/or socially detrimental impacts of their 
portfolios and their operations. FIs should create policies, 
procedures and standards based on the Precautionary Principle to 
minimize environmental and social harm, improve social and 
environmental conditions where they and their clients operate, and 
avoid involvement in transactions that undermine sustainability.


3. Commitment to Responsibility. 

FIs should bear full responsibility for the environmental and social 
impacts of their transactions. FIs must also pay their full and fair 
share of the risks they accept and create. This includes financial 
risks, as well as social and environmental costs that are borne by 
communities.


4. Commitment to Accountability 

FIs must be accountable to their stakeholders, particularly those 
that are affected by the companies and activities they finance. 
Accountability means that stakeholders must have an influential voice 
in financial decisions that affect the quality of their environments 
and their lives -- both through ensuring that stakeholders rights are 
protected by law, and through practices and procedures adopted by FIs 
themselves.


5. Commitment to Transparency 

FIs must be transparent to stakeholders, not only through robust, 
regular and standardized disclosure, but also by being responsive to 
stakeholder needs for specialized information on FIs' policies, 
procedures and transactions. Commerical confidentiality should not 
be used as an excuse deny stakeholders information.


6. Commitment to Sustainable Markets and Governance 

FIs should ensure that markets are more capable of fostering 
sustainability by actively supporting public policy, regulatory 
and/or market mechanisms which facilitate sustainability and that 
foster the full cost accounting of social and environmental 
externalities.


- ORGANIZATIONAL SIGN ONS - 

If you would like your organization to sign on, please send an email 
(by 25 January 2003) with your organization's name and country to: 
droosesnyder@xxxxxxx

Michelle Chan-Fishel 
Green Investments Program 
Friends of the Earth 
1847 Berkeley Way 
Berkeley, CA 94703 
Tel: 510 848 5932 x315 
Fax: 510 848 1008