environmental and social risk management for sustainable cities

www.unepfi.org

ENVIRONMENTAL AND SOCIAL RISK MANAGEMENT FOR SUSTAINABLE

CITIES

Paris, 14 February 2012

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Context

Investing in sustainable cities: yes, but how?

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Concept

Environmental and Social Risk Management: a tool for sustainable development ... And sustainable cities.

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Changing Finance to Finance Change

Gradual shift to sustainable economic activity

Unsustainable economic activity

BANK LENDING

Environmental and Social Risk

Management, Engagement, and

Financing

Business as usual

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Risk? What Risk?

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What a banker fears – Diminished pay-back capacity – Devaluation of guarantees/collateral – Legal responsibility – Damage to image and reputation – Diminished shareholder value

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…and how those fears relate to cities

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•  Project comes to a stand-still [pay-back capacity] •  Contaminated land [devalued collateral] •  Legal action by affected communities [legal risk]

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Início de tour du monde

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Início de tour du monde

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2003: Creation of Banktrack

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You are being watched

•  NGOs •  Import/export markets •  Multilateral Banks •  Regulators •  Investors

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Clean air Clean water

Clean environment

Stable climate

Externalities A thing of the past? Cultural

Heritage

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In short…

Protected environnement and society

= Protected banks.

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How’s a bank to cover itself?

20 years of experimentation and mobilisation in environmental and social risk management

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We, Members of the Financial Services Sector

We members of the financial services industry recognize that sustainable development depends upon a positive interaction between economic and social development, and environmental protection, to balance the interests of this and future generations. We further recognize that sustainable development is the collective responsibility of government, business, and individuals. We are committed to working cooperatively with these sectors within the framework of market mechanisms toward common environmental goals. UNEP Statement by Financial Institutions on the Environment & Sustainable Development

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•  More than 2000 risk analysts and other banking professionals trained by UNEP FI since 2005 •  Workshops and online courses

•  Available in English, Spanish, French and Chinese (coming soon)

•  UNEP FI has a team of seven experienced facilitators in sustainable finance

2005:UNEPFIlaunchestrainingac8vi8es

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Início de tour du monde

World Bank HQ, Washington D.C.

  Launched in 2003, the Equator Principles provide for the adoption of principles of social management to finance new projects. Applies to project finance.

  Any new project with total cost equal to or above U.S. $ 10 million should be framed in the rules of the World Bank / IFC ("Performance Standards")  Voluntary Agreement

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5 key steps

–  Identification – Categorisation – Analysis – Mitigation – Monitoring

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Início de tour du monde

f f f f f f f f f e

When managing risk becomes an opportunity

Companhia Siderúrgica Nacional (CSN), 2002

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Contact

Careen Abb Banking Commission UNEP Finance Initiative careen.abb@unep.org UNEP Finance Initiative www.unepfi.org