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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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