Conference Magazine - Deutsches Eigenkapitalforum

Introduction
Not just another “Mega-Trend”
Sustainability issues will have an increasing impact
on financial business
The public, institutional shareholders, the media and Non
Governmental Organizations (NGO) have all increased their
focus on how companies and banks manage sustainability
issues.
Important role for the business relationship
Potential reputational risk has increased, as can be seen
from sustained NGO campaigns against the Royal Bank of
Canada (oil sands) and Nestlé (palm oil) in recent months.
Sustainability or reputational risks arise where banks
provide financial services to clients whose activities have –
or are perceived to have – an adverse impact on the environment
or society. Financial services do not only include
lending, but also bond issues and initial public offerings (IPO).
Different organizations monitor financial institutions tracking
the operations of the private financial sector and their effect
on people and the planet. One of them, BankTrack, launched a
benchmark research project to stimulate large, international
banks to develop adequate credit policies for critical sectors
and issues in a transparent and accountable way.
Logo used by BankTrack for their benchmark research project in 2007
Source: BankTrack, “benchmarking the credit policies of major international
banks”, 2007
HSBC’s approach
HSBC aims to run a sustainable business for the long term
and seeks to embed social and environmental issues into
its daily business. Amongst others it already developed its
own policies for socially and environmentally sensitive sec-
Page 16 Deutsches Eigenkapitalforum Fall 2010
Marc Bernhof, Associate Director,
Credit Sustainability Risk Manager,
HSBC Trinkaus
tors in 2003, including Chemicals, Defense, Energy, Forest
Land and Forest Products, Freshwater Infrastructure and
Mining and Metals. The sector risk policies are based on
international standards of good practice like The Equator
Principles and consider the thoughts of clients, share -
holders, NGOs and industry associations. These policies
are applied regardless of the value of the transaction or size
of the business. They set out standards to be followed
when lending or investing in companies or projects and
specify areas where an involvement is prohibited or
restricted. If a customer is currently not compliant with one
of HSBC’s sector policies but shows a credible path to be
so, HSBC will consider supporting the customer. That is
Figure 1: Definition of Sustainability
Social
Source: HSBC
Economic
Corporate
Sustainability
Steffen Pörner, Director, Head of
Corporate Com munications,
HSBC Trinkaus
Environmental