Sustainable finance

Sustainable risk management

Environmental and social risk management involves balancing sometimes competing sustainability goals. For example, hydro power is a renewable resource, but its construction can have a significant impact on biodiversity and local livelihoods. Power generated by fossil fuels contributes to climate change, yet it provides a degree of energy security.

Our Environmental and Social Risk policy requires all lending decisions to include consideration of risks such as climate change, including the physical risks it brings from extreme weather and other changes. It also covers the impacts of clients’ activities on biodiversity, deforestation, air and water pollution. This holistic approach to sustainability risk means we are steering our lending towards higher-quality assets.

Our environmental and social due diligence process requires all contentious or high-impact transactions to be reviewed at our Wholesale Banking Responsibility and Reputational Risk Committee. In 2008, we reviewed over 30 prospective transactions before committing financing.

Position statements

Certain key sectors and issues are particularly important because of our financial exposure and their high impact on society and/or the environment. In 2008, we implemented a series of position statements providing guidance on two broad issues (climate change and child labour) and 11 sectors shown below.

These principles are embedded in our lending criteria and included in our core curriculum for lending staff. In summer 2008, we also introduced an employee eLearning module on Sustainable Lending as mandatory learning for all credit officers and relationship managers in Wholesale and SME banking.

The position statements identify the social and environmental standards we expect from the clients we finance. They are accompanied by practitioners’ guides to help our staff apply the principles. The guides provide a checklist of questions covering environmental, social and governance issues, intended to ensure that the client has the management capacity, commitment and track record to meet our expectations. This is now a required step in the credit application process.

The position statements are publicly available on Standard Chartered’s Group Sustainability webpage.
The boxes below summarise our position on two key issues.

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