SUSTAINABILITY
Code of conduct for managing
environmental and social risk
Registered commercial banks have adopted a code to manage their impacts
on society and the environment.
OWN OPERATIONS AND PROCUREMENT
The Association members commit to complying with applicable
national law and regulatory requirements and endeavour to meet
international norms and standards.
Each member bank will assess, document and report on the direct
impacts that they have on the environment and the communities
in which they operate and implement controls to mitigate risk.
This includes their own use of energy and natural resources, waste
management and promotion of recycling initiatives. On the social
side members will seek to maximise social benefits that might result
from operational choices, such as job creation, meeting economic
empowerment standards and extending financial services into
communities which have historically been excluded from the
banking system.
SXC.HU
T
he Banking sector, like so many others, is under
pressure to demonstrate responsibility in managing
the impacts its business has on society and the natural
environment. Clearly its direct impacts are limited to
those of accommodating staff, engaging customers
through various media and enabling access through branches, ATMs
and electronic means. The indirect and perhaps more important
impact is in the secondary effects of what it finances.
To demonstrate that it has considered the impacts and the risks
and is taking proactive steps to reduce risk to the sector, the chief
executive officers of members of The Banking Association South
Africa (The Association) have adopted a Code of Conduct for
Managing Environmental and Social Risk (Code of Conduct).
The Code of Conduct recognises that financial institutions can,
and do, play a role in the protection, promotion and fulfillment
of social, economic and environmental rights in South Africa, by
conducting their operations in a sustainable manner. The Code
addresses both the operational and organisational impacts and
the need to proactively promote responsible practice through their
value chains. The lending decisions of members and the operations
of their clients could have significant implications for the country
as a whole, considering the resource-intensive nature of many of
South Africa’s industries as well as the nation’s resource base and
rich biodiversity.
The Code supports and acknowledges the existing practice of
The Association’s members and sets out a framework that provides a benchmark for what is required. The framework includes
own operations and procurement, lending practices and products
and services.
LENDING PRACTICES
Members will set up internal processes to identify high risk industries
where additional due diligence may be required, and will ensure
that their credit and risk management policies give due recognition
to environmental and social risks when making lending decisions.
Further, each member will develop due diligence guidelines to guide
their staff when interacting with high risk industries.
Salient member banks which provide project finance facilities
to clients have adopted the global Equator Principles framework
for assessing and managing environmental and social risks when
providing clients with credit facilities. Equator Principles Financial
Institutions are required to create systems and procedures to
identify, measure and monitor environmental and social risks
during the life cycle of project finance agreements, which will be
reviewed regularly for adequacy and effectiveness.
PRODUCTS AND SERVICES
Where it is commercially viable and sustainable, The Aassociation’s
members will promote the inclusion of individuals and small
enterprises into South Africa’s financial sector framework, as well
as the promotion of job creation and economic and environmental
sustainability in all activities, including corporate social investment.
The members support the transition to a low-carbon economy
and will develop commercially-viable approaches through lending
facilities and financial products that support the expansion of the
green economy.
www.banking.org.za
Edition 3
THE BANKER
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