PROMOTING ENVIRONMENTAL AND SOCIAL

RISK MANAGEMENT (ESRM) IN THE

FINANCIAL SECTOR OF PAKISTAN

OUTLINE

The concept of ESRM

Global ESRM programme

Challenges faced by the bankers

Why ESRM is important for clients

Why ESRM is important for Banks

Way forward

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PAKISTAN SCENARIO

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QUICK STATS

cost of environmental degradation in Pakistan is about 4.3 % of GDP (US $ 4.3 billion ) ---SUPARCO

had needed to spend Rs82.5 billion on industrial environment management between 1997 and 2010, but actually spent only around Rs7.5 billion, leaving a deficit of Rs75 billion. If we continue polluting our ecosystem at the current rates, this deficit could climb to Rs140 billion by 2025. --- Express Tribune, 2012

741 cases registered against factory owners for not complying with the National Environmental Quality Standards (NEQS), 339 have been settled while remaining 402 cases are still under consideration of the Environmental --- The Nation, 2010

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WHAT IS ENVIRONMENTAL & SOCIAL RISK

MANAGEMENT (ESRM) FOR FINANCIAL

INSTITUTIONS?

Sustainable finance (ESRM for FIs) can be defined as

the provision of financial capital and risk

management products and services in ways that

promote or do not harm economic prosperity, the

ecology and community well-being.

Sustainable Finance does not mean saving the

environment just for the sake of saving it.

Sustainable Finance means good business for FIs.

Scope of ESRMProject Finance Corporate Finance SME

WHY IS SUSTAINABILITY IMPORTANT

FOR CLIENTS?

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Reputational Risk

Compliance

Access to New Markets

Cost saving

Loss reduction

heart. Caring for the environment is a pure business decision.

Banks should also care about sustainability for pure business reasons

Why Banks should worry about Sustainability?

Campaigners gave

employees outside each of the 3 banks, Standard Chartered, BNP

Paribas and Credit Suisse in London.

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This is an example what the banks should avoid--- a reactive approach once

reputational harm has been done.

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