Document Abstract
Published:
2008
Mind the gap: benchmarking credit policies of international banks
Bank policies for social and environmental sustainability
The objective of this project was to stimulate the banking sector to develop and implement credit policies that achieve a socially and environmentally sustainable and just society. BankTrack studied 45 large internationally operating banks. The report analyses policies on the environment including: agriculture, dams, fishery, forestry, military industry, mining, oil and gas. And social issue policies: biodiversity, toxics, climate change, human rights, indigenous peoples, labour and taxation.
Mind the Gap indicates that many banks have recently been adopting some form of sector and issue policies, having undersigned one or more of the voluntary sustainability standards and initiatives:
While few banks have developed sector and issue policies by themselves, which almost meet best international standards, no bank has developed policies on all seven sectors and seven issues. Ten banks have developed no sector or issue policies at all.
The study also points out that there is some progress regarding ‘institutional’ transparency, in that 34 out of the 45 banks now meet a basic level of transparency by publishing an annual sustainability report. Yet, hardly any bank exceeds this basic level, for instance by offering extensive insight into the credit policies it has developed, and the efforts undertaken to implement them.
None of the 45 banks publishes a list with the basic details of ‘deals’ it has been involved in. Some 22 out of the 45 banks do not even publish a sector or regional breakdown of their portfolio. Even fewer banks show any form of accountability to local communities and other stakeholders affected by specific deals the bank is involved in.
The study describes 30 Dodgy Deals, i.e., controversial clients or projects to which one or more of the banks recently provided financial services. This implies that nearly all banks in the study, including those who have developed robust credit policies, are involved.
Mind the Gap encourages all the 45 banks, as well as their peers not covered in this report, to move further and faster and to close the gap that often still exist between policies and practice.
Mind the Gap indicates that many banks have recently been adopting some form of sector and issue policies, having undersigned one or more of the voluntary sustainability standards and initiatives:
- 31 out of the 45 banks researched have adopted the Equatorial Principles
- 30 banks signed on to the UNEP Finance Initiative Statements
- only five banks did not commit to any voluntary standard or initiative
While few banks have developed sector and issue policies by themselves, which almost meet best international standards, no bank has developed policies on all seven sectors and seven issues. Ten banks have developed no sector or issue policies at all.
The study also points out that there is some progress regarding ‘institutional’ transparency, in that 34 out of the 45 banks now meet a basic level of transparency by publishing an annual sustainability report. Yet, hardly any bank exceeds this basic level, for instance by offering extensive insight into the credit policies it has developed, and the efforts undertaken to implement them.
None of the 45 banks publishes a list with the basic details of ‘deals’ it has been involved in. Some 22 out of the 45 banks do not even publish a sector or regional breakdown of their portfolio. Even fewer banks show any form of accountability to local communities and other stakeholders affected by specific deals the bank is involved in.
The study describes 30 Dodgy Deals, i.e., controversial clients or projects to which one or more of the banks recently provided financial services. This implies that nearly all banks in the study, including those who have developed robust credit policies, are involved.
Mind the Gap encourages all the 45 banks, as well as their peers not covered in this report, to move further and faster and to close the gap that often still exist between policies and practice.
