Local banks commit to responsible and environmental-friendly lending

Ahead of the United Nations Environmental Programme Summit Financial Initiative (UNEP FI) in Cape Town this week, local banks through the Banking Association have re-committed themselves to facilitating that responsible and socio-environmental lending practices and investment are followed and complied with in South Africa.

According to Pierre Venter, General Manager Socio-Economic Growth and Development for the Banking Association South Africa, local and international industry, nongovernmental organizations and public sector stakeholders are assembling in Cape Town to roundtable climatic issues and commitments that stakeholders will be prepared to make. The Summit will act as a forerunner to the Copenhagen Summit which will take place towards the end of this year when leaders from around the world will assemble to commit their countries to pursuing a programme to reduce their carbon emissions. This Summit should impact positively on the adverse climatic changes the world, including Africa is experiencing and to contribute towards the sustainability of the planet.

It is critical that the banking sector plays a proactive and responsible role and that it commits itself to ensuring that their business clientele adhere to environmental friendly business practices, including compliance with the Equator Principles of the United Nations Environmental Programme Financial Initiative (UNEP FI) and the global banking community. These principles set out responsible and eco-friendly investment and lending, practices across industry sectors, including sustainable finance.

“It is vital that the banking sector supports the global move to combat pollutants by supporting eco-aware industry and investment. From an African perspective, as a developing continent, our carbon footprint is far smaller than those of the developed nations but yet our continental climate is adversely affected by industrial pollutants primarily emitted from developed countries. Africa is therefore coming off a low carbon base in comparison to developed countries, but nevertheless we need to improve our level of emissions, as many environmental experts believe that the non-sustainability of the planet is in its eleventh hour and that unless everyone pulls together, both business and civil society alike, the outcome will be catastrophic.

South Africa’s major banks have pledged to support the principles contained in the Equator Principles and are in the process of implementing governance and risk management procedures that will ensure that clientele are subjected to an environmental evaluation before they are permitted to either borrow or invest monies with a bank. This should ensure that targets are met and responsible lending policies are followed.”

Training workshops are currently being implemented for banking staff in responsible lending including changing the way loan applications are evaluated and putting safeguards in place to ensure industry projects are not high pollutant producing.

Venter says local banks committed to the Equator Principles will be asking harder questions about who they are lending money to and the impact of new developments on the environment.