Anyway, Warren Buffet has decided to give Goldman Sachs help before they need it by investing $5 Billion.  I don't know the details, nor do I care because finance bores me.  But you can read all about it here.

This affects me because my husband will be an employee at Sachs.  No I'm not engaged, nor am I dating someone, nor do I know anyone who workd at Sachs.  But I do know my husband will work there.

It will be a match made in heaven.  Everyone knows the Finance industry is heavily male populated, they make a ton of money, but they have ZERO social clout. And the Fashion/Entertainment industries are heavily female/homosexual populated, we make peanuts, but after celebrities and models, and sometimes before them, we have the most social clout in the city.

I'll get us in the door and he can buy the bottles.  Sounds good to me.

Take the Goldman Sachs Quiz.  Find out where you would fit in.

According to the quiz I should consider: Global Compliance and Legal and Management Controls.  I should also consider: Credit Risk Management and Advisory and Equities.

I almost fell asleep writing that. Buffet hurry up and write that check so I can go out and find my hubby.

 The work is being undertaken by the Chinese Academy for Environmental Planning (CAEP), in cooperation with the Global Environmental Institute (GEI) and the University of International Business and Economics. The first draft is now being discussed, the GEI said.

 A report released by the CAEP last week said the country lacked comprehensive environmental protection policies in its overseas projects, although investment had been expanding.

 Statistics show that between 2002 and 2006, China's overseas non-financial direct investment grew by 60 percent annually. By the end of 2006, 5,000 Chinese companies had set up nearly 10,000 directly invested firms and invested $90.6 billion in 172 countries.

China's overseas investment and aid mainly focuses on exploring oil and other resources, processing, manufacturing, and construction in African and Southeast Asian countries. Without proper management, such projects are likely to cause environmental problems, the report said.

In April, several companies, including China Mobile, Haier Group, and China International Marine Containers, joined "Caring for Climate", a voluntary UN initiative to combat global climate change. Liu Meng, director of UN Global Compact China Office, told China Daily earlier that these companies' participation suggests that China's business sector is catching up with its international counterparts on climate issues.

China National Petroleum Corporation, the country's largest oil producer, has pledged to stick to stringent environmental requirements before deciding on overseas projects.

Currently, only four banks in China have either formulated independent environmental standards for financing, or have joined the United Nations Environment Program Finance Initiative to reduce environmental risks.

Statistical credit score-cards serve up as a better alternative to the traditional judgmental methods of risk appraisal when a bank is making a decision whether to lend to a customer or give him a credit card or not. Risk Scorecards combine historical loan default data with the demographic and transaction details to arrive at a risk score for an applicant. Statistical techniques are applied to data on existing customers to generate equations that can accurately distinguish good customers (customers who repay on time) from bad customers (customers who don't repay on time or don't repay at all). This equation or scorecard is used to score new applicants. Statistical scorecards lend themselves to automation. From the consumer's point of view this ensures quick turnaround time in the evaluation process as well as total consistency, eliminating any bias, which may be present in a human analyst.

Another instance of analytics in banking and where results are apparent almost instantaneously is cross-selling. Banks are leveraging their existing databases of customers more judiciously to rope in customers for lending products like credit cards and loans. Since banks are sitting on wealth of information like liability transaction which sets the base for response models predicting their response to another marketing offer. The cross sell models throw up interesting triggers about the customer setting the stage for life-cycle based marketing or event based marketing. Already, close to 70% of credit cards portfolios of most banks are sourced through cross-sell from their own bank account customers.

One crucial fallout of analytics based marketing campaigns is the tremendous cost savings accomplished by the bank by restricting its soliciting efforts to the customers who are predicted to be active rather than widening its efforts onto the entire customer base and incurring huge costs there. Using customer segmentation solutions, a bank can get 1.5 times more eventual customers to a particular offer while actually contacting a much narrower customer base.

Nowhere else the effect of analytics based marketing is more apparent than in the credit cards companies where analytics have become a way of life. In a fiercely competed battle for wallet share where an average credit card holder holds 3 to 4 credit cards and free credit cards have become the norm, getting a credit card customer to spend on your credit card and ensuring that he sticks to your credit card. Analytics based customer marketing and value management solutions will help you to design optimal customer development strategies, maximize your customer’s profitability by widening the relationship across different banking products and optimize existing customer relationships.

Customer Segmentation strategies which help a portfolio manager to know smaller cohesive groups sitting within his larger customer base, understanding their transaction patterns and hence preempting his requirements goes a long way towards customizing campaigns, offers linked to campaigns and even the tone of the communication directed towards the customers.

A sample size of about 3000 customers (1500 good customers and 1500 bad customers) can give a very robust credit scoring model. Data on rejected applicants is also vital for building the scoring model. Usually, a base of 1500 bad customers requires a large base of overall credit population. Good scoring models (with restricted scope) can be built even with as many as 250 bad customers.

If an organization doesn’t have sufficient past data on credit performance and no credit bureau information is available, scoring models of different kind can be built. These are expert judgment models which extract the business rules and the intelligence implicit the lending practices of the bank’s analysts. These models are less accurate but can still attain objectivity and consistency in lending practices.

Scoring models need to be optimized for the business at hand incorporating the opportunity loss on a rejected consumer who might have been good and the credit loss on accepting a consumer who may be bad. Once a scoring model is implemented, approval/acceptance rates of consumer applications can be predicted with fair degree of confidence. A scoring model can be optimized to maximize profitability of the business or meet a given acceptance rate requirement.

Few niche analytics service providers such as Fractal Analytics provide modeling solutions that enable businesses to develop credit scoring models. They are known to use cutting edge mathematics and technology, and back it with exhaustive data models built off bureau and transaction data.

A credit scorecard should be tracked closely for its stability and its ability to distinguish between the less risky and more risky consumers. A risk analysis and reporting system can perform model tracking and give warning signals when the underlying population or business practices are undergoing a change. A model should be recalibrated at this stage. Analysis and reporting system can also help to assess the portfolio concentration and performance and estimate portfolio profitability.

A credit scoring solution is built on a modeling population. This model when ‘tested’ with external data (“out of sample”) and simulate the savings that can accrue to the firm on using the scoring model instead of judgment based credit decision. This is the acid test for model performance. After the model implementation (either as a “challenger” or a “champion”) - actual benefits can start to accrue to the firm over a period of time.

• Who is the intended audience and what are their needs?

• Will the Policy be all encompassing or a high level?

• What is the intended delivery system?

• How will the Policy be maintained?

Use, misuse and abuse of human rights rhetoric: the case of Serbia

National application of human rights law is one of the most important tests of its efficacy. This article examines the integration of international human rights law into Serbia’s legal system. The paper argues that the use of human rights language does not necessarily indicate the proper and correct use of human rights norms

The paper covers the following:

• an overview on the intersection of international and national law with special reference to Serbia and Montenegro
• the existing legal framework for the integration of international human rights law
• an examination of the propriety of human rights law language discourse
• a discussion on the separation of the executive and the judiciary

The paper makes the following conclusions:

• the legislative framework in Serbia favours the integration of human rights law
• despite some successes there some legislative acts and a lack of human right jurisprudence indicates that international human rights law has not been properly integrated into the legal system
• there has been a misuse of human rights law and clash between judicial and political discourse on human rights
• the inadequate training of the judiciary has led to judicial deference to the executive branch of government.

"While detailing the evidence of potential benefits for banks in integrating sustainability into their business strategy, the report reveals a dramatic shift in banks' awareness of these benefits," said Rachel Kyte, IFC Director of Environment and Social Development.

In a 2005 IFC survey, 86 percent of 120 financial institutions interviewed reported positive changes as a result of steps they had taken to integrate social and environmental issues in their business.The report shows evidence of the potential benefits of adopting sustainability as a business strategy. It also shows a dramatic shift in banks' awareness of these benefits. Banks can tap vast benefits by reassessing their business practices and engaging in sustainability-oriented risk management and product development.

It is notoriously difficult to quantify the financial benefits of adopting sustainable business practices, however this report demonstrates some clear business benefits from adopting and integrating environmental and social considerations into core business strategies.

The ILO Convention 169 and the Private Sector (PDF, 90kb) publication is intended as a practical guide for IFC clients who operate in countries that have ratified Convention 169 on Indigenous and Tribal Peoples. It is the first guidance of its kind written for the private sector in relation to Convention 169 which is directed at governments. IFC prepared this publication, in close consultation with the ILO, in response to the experiences that IFC has had in recent years with private investments affecting indigenous peoples and their lands in Latin America.

IFC hopes this publication will help to raise awareness about the Convention and its possible implications for private sector companies, and provide added clarity and guidance for IFC clients. The publication should be read in conjunction with IFC's Performance Standard on Indigenous Peoples.

The 2006 report is based on the ‘G3’ GRI guidelines, and sets out Westpac's extended performance in building human, social and environmental capital. It also includes contributions from a number of thought leaders, suppliers and community advocates.

In the past year, Westpac has:
Committed to the revised Equator Principles - the only Australian bank to do so;
Launched two new 'green' products: the EcoNomical Home Loan and the Westpac Landcare Term Deposit account;
Continued to reduce greenhouse gas emissions –cutting emissions by over 45% since 1996;
Contributed a total of AU$47m to the community, 1.4% of pre-tax profits; and
Celebrated 30 years of partnership with Surf Life Saving Queensland.

The report again emphases the links between sustainability and shareholder value, with Westpac CEO, Dr David Morgan, stating that managing social, environmental and workplace performance, along with stakeholder relationships and other intangibles, is fundamentally linked to long-term shareholder value.

• The need to manage the success of the principles. The need to prevent their extension to areas other than Project Finance weakening the brand, due to insufficient leverage in such areas.
• The EP's have lead to an unprecedented level of collaboration by Financial Institutions.
• There is a lack of mechanisms for demonstrating how the adoption of the EP's have contributed to business performance and financial benefits, but despite this FI's are see these issues as key to their core branding.
• There is a need for a pragmatic approach to their application, in certain situations when good project sponsors and FI's have turned down projects with high potential environmental and social risks, the projects have been progressed by weaker parties and consequently developed more severe environmental and social problems.
• There is a need to manage expectations about what the EP's will achieve - e.g. they have not been established to be a tool for equity.
• There has been a lack of developing market banks and a notable absence of leading French Banks adopting the EP's.
• The need for sufficient lead in times to review Finance deals to avoid situations where problems are picked up too late on a project to enable compliance.
• Some banks are striving to be leaders in sustainability, while others believe the EP's have created a level playing field.

Sustainable Finance Summit 2006

Recognition of the key role of financial institutions in stable and sustainable development has come. This leading-edge conference will show the way forward on these difficult, but essential issues. As banks go truly global, many for the first time, they are entering and whole new world of trust, risk – and opportunity – that must be well managed.

The newly revised Equator Principles now represent some 85% of global project finance , and that percentage is going up almost daily.

How banks can manage both profit and sustainability will be addressed early on by Jon Williams , a leading thinker and practitioner who is also Head of Group Sustainable Development at financial behemoth HSBC Holdings.

Among those speakers will be:

F&C Investments * The Co-operative Bank * Standard Chartered * FTSE * Barclays * ABN AMRO * HSBC Holdings * UBS Investment Bank * Wall Street Journal * Financial Times * KLD Research & Analytics * Henderson Global Investors

The sharing of project experience is an exemplary approach to risk management, it is excellent to see the IFC sharing their findings and contributing to the development of Good Practice in this way.

The Baku-Tbilisi-Ceyhan (BTC) Pipeline Project:
The BTC pipeline is 1,760km long and runs from Azerbaijan through Georgia to the Mediterranean coast of Turkey. At the time of its commencement, BTC was the largest crossborder infrastructure construction project in the world. The project faced a wide variety of complex and often difficult environmental and social challenges. Financing was agreed in February 2004 after more than two years of appraisal of the potential environmental and social impacts. Construction was completed in late 2005 and export from the new terminal in Ceyhan commenced in June 2006.
While it is impossible to capture all the challenges and complexities encountered during the design and construction phase of the BTC project, this publication focuses on six thematic areas where environmental and social lessons learned were thought to be most valuable and applicable to other IFC-financed projects.

External Monitoring of the Chad-Cameroon Pipeline Project
The Chad-Cameroon pipeline project is a US$3.5 billion development of an oil field in Chad by a consortium headed by ExxonMobil, and a 1,070 km long pipeline extending through Chad and Cameroon to the Atlantic coast. The External Compliance Monitoring Group (ECMG), funded and logistically supported by the Consortium, serves as the team responsible for auditing the implementation of the Consortium's environmental and social commitments for this project. “External Monitoring of the Chad-Cameroon Pipeline Project: Lessons of Experience" provides lenders and project sponsors with an understanding of the business case for employing an external monitor, as well practical advice regarding the major steps and key issues for designing, implementing, and operating an external monitoring mechanism for complex projects. To highlight the practical challenges and value of the external monitoring mechanism, the publication draws illustrative examples from the experiences of IFC during the Chad-Cameroon pipeline Project.
PDF files can be downloaded at: http://www.ifc.org/enviropublications

The improved dialogue between NGOs and Financial Institutions that have been brought about through intitatives such as the Equator Principles.

The growing need to recognise that employees awareness of their personal accountability if growing, and employees are increasingly unprepared to compromise their ethics and standards in the workplace.

This special report is designed to offer the reader insights into how major institutions are responding to the sustainable development agenda. Also covered are increased expectations on business transparency and the role of regulators.

An interesting Case study discussed in the Report is the Baku-Tbilisi-Ceyhan (BTC) pipeline – which is now transporting oil from the Caspian Sea to the Mediterranean.

The $4 billion project showed how difficult it can be to address the social impacts of large infrastructure projects, such as the resettlement of local people and their compensation.
In Turkey, 300 villages were cleared during the building of the pipeline. Compensating villagers involved negotiating complex local laws – one piece of land was owned by 800 different people – and the fact that 70% of affected land owners had no legal right to compensation.
BP managed to compensate all land owners, but still there were disputes over what villagers were entitled to – for example, whether corn compensation was to be calculated at cost or market value, and over three years or just one. These disputes show how messy project finance can be on the ground.

The free PDF version of Ethical Corporation’s special 44-page report, Financial sector responsibility: The state of the art, is available to download at: www.ethicalcorp.com/fsr/

In general it is certainly not a lack of commitment on the part of EP banks to managing these risks that causes the difficulties, and the vast majority have made an impressive effort in this area. A key factor is the limited ability of FI' to influence project sponsors, and as the project progresses, to influence other parties such as construction contractors and workers. The main ways FI's can exert their influence is either by refusing to finance the project, or by writing covenants in to the loan agreement that must be met prior to each draw down of the loan.

This is not to say that project sponsors are the weak link in the environmental and social risk management process, but there is a need to recognise that the maturity of sponsors varies considerably, with some demonstrating a far better understanding of the potential risks and recognition of the need for robust management approaches than others.

While FI's and their advisors can help project sponsors to understand how to manage risks effectively, the onus remains on the sponsor to follow the guidelines and implement the recommended measures at the appropriate time.

Extracts from The Banker

Equator Principles
Oliver Balch reports on how environmental activists and bankers are entering a new era of understanding through the Equator Principles.

Shareholder value
Banks are increasingly conforming to the view that social and environmental risks pose a threat to long-term shareholder value. “Protecting our assets in a traditional sense is risk management and protecting shareholder returns,” explains Andre Abadie, head of sustainable business advisory at ABN AMRO. “So if we are financing potentially socially and environmentally egregious projects in far flung corners of the world, then we also have the commitment to ensure that the social and environmental footprint of those projects is well managed.”

Limits of Environmental and Social Due Diligence

But the scope of non-financial due diligence has its natural limits. The financier needs to know the end purpose of the loan if it is to assess the environmental impact of its lending activities.

“If you’re advancing a corporate loan to a large company that is not being used specifically for a project, it is not going to be reasonable or practical to get that [environmental] information across all the projects that the company might be working on,” says Jon Williams, head of group sustainable development at HSBC in London.

Naturally, for some corporate or government loans, banks will be aware of a loan’s end use. The same is true for certain debt securities placements and underwritings, equity transactions and letters of credit. But one area where banks certainly have prior knowledge is, by definition, project finance. Consequently, this is where the banking industry has channelled the bulk of its efforts to date.

Extraneous limitations on due diligence
External, not internal, reasons limit banks’ environmental due-diligence efforts, many risk specialists argue. Short of calling in its loan, a bank’s influence over a project sponsor depends largely on delicate client management. The revised Equator Principles aim to add an extra safeguard by covenanting certain environmental commitments up front. They also require all high-risk projects to be assessed independently throughout the lifetime of a loan. Experience has shown that a bank’s ability to influence other actors can be even more limited than with their clients.

Chris Bray, head of environmental risk at Barclays, believes the Principles have sent a clear message that social and environmental issues represent mainstream business risks. More than that, the principles have shown banks their main environmental impacts derive from how they use their money. As Mr Bray puts it: “Equator has fairly and squarely put lending centre-stage.

HSBC's approach
In the past three years, the UK-based bank has adopted a raft of environment-related policies and procedures. The list includes specific guidelines on dangerous chemicals, freshwater infrastructure and forest products. In May 2005, HSBC became the first major private bank to put its name to the World Commission on Dams. Within the next 12 months, it plans to add an extractive industry policy to its growing catalogue of green tape. Underpinning what HSBC terms its “restricted appetite” for environmentally sensitive transactions lies its environmental risk standard. Launched in 2002, the standard is designed to minimise the environmental, credit and reputational risk associated with the bank’s investments. Most of the procedural steps are straightforward. HSBC’s due-diligence register, for example, now features environmental impact assessments and reviews by external auditors.

The report identifies factors hindering Socially Responsible Investment in emerging markets:

• perceived lack of consistent and widespread good corporate governance
• continuing government ownership and control such as with many large listed Asian companies that can be a critically important variable in Environmental and Social Governance performance
• the retention of large controlling interests by families in many emerging market companies that limit the rights and influences of minority shareholders.
• even where governance, environmental or labour regulations are strong in some countries, enforcement is sometimes weak.
• doubts about the honesty of some disclosed information or its credibility. For instance, in relation to ISO14001, the reputation of those providing the certification is crucial for trusting the information disclosed.
• difficulties in engaging with companies in emerging markets. Although language may be a factor in some cases, the corporate culture of many companies is not yet responsive or attuned to international investors especially relating to environmental and social issues.
• a limited number of third party organisations in these countries or regions to undertake the research required on companies. The Iinternational Finance Corporation is undertaking initiatives to facilitate and increase this research capacity.

Contractors operating in unstable states face a range of conflict risks. Oil, gas and mining projects, which frequently have significant contractor involvement, can inadvertently trigger or sustain violence, or become the focus of resentment themselves. Produced in partnership with Engineers Against Poverty, this guidance note is addressed both to engineering contractors and their clients. It examines some key issues related to conflict, contractors and conflict sensitivity, and introduces conflict-sensitive business practice (CSBP) – steps through which these issues can be understood and managed.

The report outlines some of the key costs of conflict to projects, which include:
Direct costs:

• Security - Higher payments to state/private security firms; staff time spent on security management
• Risk management - Insurance, loss of coverage, specialist training for staff, reduced mobility and higher transport costs
• Material - Destruction of property or infrastructure
• Delays - Lost time through site blockades or disruption of materials and services
• Capital - Increased cost of raising capital
• Personnel - Kidnapping, killing and injury; stress; recruitment difficulties; higher wages to offset risk; cost of management time spent protecting staff
• Reputation - Consumer campaigns, risk-rating, share price, competitive loss
• Litigation - Expensive and damaging law suits

Indirect costs:

• Human - Loss of life, health, intellectual and physical capacity
• Social - Weakening of social capital
• Economic - Damage to financial and physical infrastructure, loss of markets
• Environmental - Pollution, degradation, resource depletion
• Political - Weakening of institutions, rule of law, governance movements

His proposition to use the framework approach to managing environmental and social risks that was introducted through the Equator Principles, to ensuring that the bank's clients implement good governance and anti-corruption measures certainly merits further consideration.

In their FT column on Business Ethics, Plender and Persaud make a persuasive case for throwing out regulative approached to reputational risk management, and developing effective voluntary approaches, that are fully integrated within the cultural ethics and branding of the organisation.

The Training Toolkit aims to raise awareness of human rights issues in the oil and gas industry. It provides managers with a template that can be used and adapted to conform to a company’s policy or position on human rights and applicable domestic laws and regulations. This Toolkit is not intended to be an in-depth instruction on how to conduct human rights training.

Company representatives should review the trainer’s manual prior to using the Training Toolkit to customise it to the needs of their particular circumstances. The trainer’s manual provides information on how to finalise the materials for a company’s specific purposes.

The toolkit examines the history and background of human rights and defines key risk areas for the oil and gas industry. The largest section of the toolkit deals with the engagement with stakeholders, including

• Non-Discrimination
• Employment Terms
• Supply Chain Issues
• Mitigating Community Impact
• Indigenous People
• Land Rights and Resettlement
• Local Content
• Relationships with Governments

The toolkit also presents dilemmas and scenarios that may arise form these engagements and presents a decision-making tool.

The Toolkit consists of four sections:

• 1. a presentation with the key messages for use in a training session
  2. a workbook to be used in conjunction with the presentation
  3. a trainer’s manual
  4. a resource guide.

UNEP FI and the two Greek sustainability leaders Eurobank EFG and Emporiki, hosted a one-day conference on sustainable banking. UNEP FI was delighted to welcome a representative of the European Commission as a keynote speaker at the event. The event was supported by the EBRD.

Presentations

• Opening remarks
  Paul Clements-Hunt, UNEP Finance Initiative
• The role of the financial sector in achieving a better environment - EU perspectives and initiatives
  Jorge Pinto Antunes - European Commission
• Eurobank EFG’s motivation for environmental responsibility
  Nikos Pavlidis, Eurobank EFG
• What is the motivation for a Greek Bank to take environmental responsibility? What are the business areas where environmental concern plays a role?
  Evangelos Athanasiou, Emporiki Bank
• Environmental regulations with relevance for financial institutions: the Greek and European legal framework
  Fotis Kourmousis, Union of Environmental Scientists of Greece
• The materiality of social and environmental issues to equity pricing
  Gianluca Manca, Sanpaolo IMI Asset Management
• Greening the banking products
  Dimitris Starogiannis, Eurobank EFG
• Integrating environmental criteria to credit policy
  Stella Kovlaka, Emporiki Bank
• Responsibility for Brownfields Revitalisation
  Sultana Gruber Unicredit/Bank Austria Creditanstalt
• EBRD - Your partner in eastern Europe, Caucasus and Central Asia
  Mark Rachovides, EBRD
• Environmental risk assessment - Guidance from the EBRD
  Mark King, EBRD
• Climate Change: Scientific basis and risks for the finance sector
  Dr. Hadjinicolaou, University of Athens,
• Meeting investors’ expectations
  Esther Garcia, CoreRatings - DNV

Structured energy project finance has been relatively commonplace in supporting the development of new energy facilities over the past 20 years. Central to the concept of project finance is disaggregating risk and parceling it out to specific parties who can accept that risk. As a result, project finance works great for the 30th or 40th deal of the exact same type, but it is typically very hard to use project finance approaches for funding the development of facilities using innovative technologies or commercial arrangements.

Accordingly, project finance has historically been somewhat problematic for renewable energy interests to procure. Financiers central to structuring the deal were either unfamiliar or uncomfortable with the risks posed by renewable energy technologies, most of which have not been in commercial operation for decades. This lack of project finance capacity has thus been a major barrier to the widespread deployment of otherwise viable renewable energy technologies in commercial-scale projects.

The good news is that project finance capacity is increasingly opening its doors to renewable energy opportunities. Financial professionals with deep knowledge of the true abilities of renewable energy are finally beginning to amass capital to deploy in sponsoring the development of renewable energy projects.

posted by Richard T. Stuebi click here to link to full article

Project Finance International have just published a new report Financing Renewable Energy: Funding the Clean Alternative, which (for a price) gives details on every renewable financing deal this millennium, plus analysis on future prospects.

The report  states that, there is a growing worldwide understanding of the pivotal role the investment community and capital market actors have to play in addressing critical ESG challenges. At the same time, the mainstream investment community is waking to the burgeoning opportunities associated with sustainability promoting companies, technologies and investment funds. From clean-tech, to renewables and ecosystem services, the growth industries of the 21st century are emerging at an accelerated pace.

The Key Findings are:

1. ESG issues are material - there is robust evidence that ESG issues affect shareholder value in both the short and long term.
2. The impact of ESG issues on share price can be valued and quantified.
3. Key material ESG issues are becoming apparent, and their importance can vary between sectors.

"Show Me The Money" draws on work by a group of leading financial institutions* and covers the impact of qualitative and new risk issues on company value. Industries covered include the auto-industry, aerospace and defense, the media, and the food and beverage industries. UNEP FI is a unique public-private partnership between UNEP and more than 160 banks, insurers and asset managers.

*Participating institutions include: ABN Amro Real Corretora, CM-CIC securities, Deutsche Bank AG/London, Dresdner Kleinwort Wasserstein Securities Limited, Goldman Sachs Global Investment Research, JP Morgan Securities Ltd, Merrill Lynch Global Securities Research & Economics Group, Morgan Stanley & Co. International Limited, UBS Limited and WestL AG.

The real indicators of this are the increased shareholder support for banks they consider to be more sustainable and the rapid growth in Socially Responsible Assets. This is emphasised by shareholders efforts to place pressure on banks involvement in particular deals.

A little while ago, private banks cared about sustainability because it was good for their reputation and brand. Now it is about their bottom line. There is emerging evidence of a correlation between good environmental and social behavior and good financial performance. We find plenty of examples of this in IFC’s own portfolio. Key Results In a recent survey of bankers, IFC found that 65 percent reported tangible benefits from sustainable policies.

The Sustainable Banking Awards co-organized by the Financial Times and IFC have shown that banks are using sustainability as a driver for business growth and asset quality. The Sustainability Yearbook 2006, published jointly by Sustainable Asset Management and PriceWaterHouseCoopers, says that it has been able to a show a conclusive link between performance on sustainability issues and financial performance, and a correlation to creation of shareholder value.

This trend has not gone unnoticed by private investors: In the United States, the Social Investment Forum published a report in January of this year which found that socially responsible assets grew faster than the entire universe of managed assets in the United States during the past 10 years.

By Lars Thunell, Executive Vice President
International Finance Corporation, World Bank Group July 6, 2006

For those banks that have traditionally only been involved in Project Finance deals in Europe and North America and now wish to expand their interest into lucrative new areas of operation, establising country specific guidance can reasssure risk adverse senior mangers that due attention will been given to managing the additional risks this may pose.

The new guidance offers an excellent opportunity to help companies understand the extent of these risks and ensure they are able to manage them effectively. In this way they can prevent potential damage to their reputations and still invest in challenging and rewarding projects in thses areas.

The Risk Awareness Tool can help them avoid actions that may hinder efforts to build better governance while at the same time encouraging them to consider whether there is a positive role they can play.

The OECD has come out with a Risk Awareness Tool to help multinationals operating in zones with "weak governance". The guidance was requested by participants at the 2005 Gleneagles G8 summit.

The Risk Awareness Tool is non-prescriptive but sets out a range of questions for companies to consider in such areas as:

1. obeying the law and observing international instruments;
2. heightened care in managing investments,
3. knowing business partners and clients;
4. dealing with public sector officials; and
5. speaking out about wrongdoing.

A number of resources exist for multinationals hoping to answer these questions, such as International Alert's Conflict-Sensitive Business Practice: Guidance for Extractive Industries (also in Spanish) and guidelines from the Global Reporting Initiative.

The Danish Institute for Human Rights has a more comprehensive tool, the Human Rights Compliance Assessment, that allows companies to self-assess risks specific to human rights violations. A quick assessment is free, but the full one is expensive at 4,000 euro. Or check out the (free) executive summaries of various country risk assessments, including China, Brazil and India. Posted by Christine Bowers