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Perspective of a director in Wholesale Banking

Perspective of a director in Wholesale Banking

Despite the inherent sustainability challenges, the oil and gas sector is of strategic importance to Standard Chartered and our markets, many of which are large producers and consumers of hydrocarbons. Our oil and gas position statement, provides our relationship managers with guidelines to examine the client's approach and make a realistic assessment of their ability to comply with the associated standards. Our environmental and social risk management tool (ESRAT) also plays a role in assessing associated risks. For example, ESRAT brings our oil and gas position statement to life by assessing risks and issues such as gas flaring or the impact on critical natural habitats and indigenous peoples or lands.

Russell Kalam, a Director in Wholesale Banking, explains how his colleagues use ESRAT in assessing clients and deals.

"Working with our clients is a key component of making a realistic assessment on environmental and social risks associated with their business or a specific deal. Desktop research is only the first step and it is important that we work with our client's senior management and operations managers to find out what their approach to environmental and social governance is and any issues that they may be having, or have had in the past. On some occasions, we will also make a decision to pay a site visit.

As a Director, my area of specialisation is not on environmental and social risk. However, by using ESRAT and working with our sustainability team, we can have simple, straightforward conversations with clients to make an assessment about whether a deal complies with the standards in the position statement. In many situations we can also get an understanding of what voluntary standards or principles our client follows. For example, some participate in the Extractive Industries Transparency Initiative (EITI) and the International Petroleum Industry Environmental Conservation Association (IPIECA); two initiatives that enable clients to better manage environmental and social risks in the sector, while also providing us with an added level of comfort.

Once an assessment is made and ESRAT is completed, we work closely with our sustainability team who provide oversight on the deal's compliance with our environmental and social policies and procedures. Together, we develop a set of requirements to ensure long-term compliance with our approach, and also provide guidance on whether the deal should be escalated to the Wholesale Banking Responsibility and Reputational Committee. We also work with our credit department to fulfill any conditions on the deal and our legal department to complete the documentation.

Throughout this process, we hold regular conversations with our client regarding any environmental and social risks that we may have identified and the potential mitigants. To date, feedback about our approach has been very positive. Even those clients who do not comply initially prove very receptive and find our advice and support to promote improvements and formulate an action plan invaluable. Many of our clients acknowledge that a sound approach to social and environmental governance also provides them with a competitive advantage."

Report tools

Annual Report and Accounts 2009