Protecting Our Assets
As attention intensifies on the contribution of business to sustainable development, there is a growing recognition of the financial sector's key role.
Financial institutions can influence environmental, social and ethical outcomes indirectly through their choice of business partners and the terms on which they work with them.
In allocating capital, we have both a responsibility and an opportunity to promote best corporate practice. ABN AMRO has integrated environmental, social and ethical considerations into its risk engagement process. This helps us to reduce the fundamental risks underlying our selected client portfolios and transactions and to create more sustainable (and profitable) long-term business relationships. Both our business and our clients benefit.
ABN AMRO takes a prudent, holistic and professional approach to managing risks, including credit risk; environmental, social and ethical risk; country risk; market risk; operational risk; and risk to our reputation. This approach includes separating our risk management from the commercial lines of business to ensure balanced and independent decision-making.
Risk policies
We have developed sector policies to assess how our involvement with clients could affect the environment and communities. One example is our forestry policy, which governs our business transactions with clients and projects – such as palm oil plantations – that may harm tropical rainforests and the people who live there. Recently we have developed an animal testing position statement.
Equator Principles
ABN AMRO also played an active role in initiating, formulating and redrafting the Equator Principles, a set of voluntary guidelines for addressing social and environmental risk in project financing, based on the policies and standards set by the World Bank and the International Finance Corporation (IFC). More than 50 financial institutions have now adopted The Equator Principles.
We apply the Principles to project finance engagements, irrespective of the capital cost. We also apply the spirit of the Equator Principles to corporate loans and other financial services products where these are connected to a particular asset.
Sustainable Risk Advisory (SRA)
Comprehensive risk management is a core competency of ABN AMRO. We believe that integrating sustainability criteria into our business engagement processes enables us to take a coherent, multifaceted approach to business choices and reach balanced, well-informed decisions.
To facilitate and support this objective, the bank's Group Risk Committee (GRC) is mandated to include ESE considerations in decision-making on client and transaction engagements. A dedicated team - Sustainable Risk Advisory (SRA) - assesses and advises the GRC and acts as a centre of expertise for the various Business Units (BUs). In line with ABN AMRO's Sustainability Strategy and Strategic Risk Agenda, SRA launched a project in April 2006 to integrate ESE risk assessment into the mainstream risk assessment processes within all the BUs across the bank.
As part of Group Risk Management, SRA operates independently of the bank's commercial activities.