Case studies

Case studies

• Supporting good environmental practice

  Barclays was approached by a company which, in the past, had been responsible for a number of local environmental violations. Before committing to any involvement, we requested an independent review of the company’s newly developed environmental management system, as well as evidence of how they intended to implement it throughout their operations.

  The terms of reference for the independent review were prepared to meet our standards, and the review was undertaken by a qualified environmental consultancy. After reviewing a range of documentation and undertaking a site visit, the consultancy confirmed that the company’s environmental management plan adequately addressed past issues, and represented a significant change in their overall approach to managing environmental and social issues. The company also announced the appointment of senior environmental managers as further evidence that they were building capacity to manage these issues in the future.

  On condition that the company would provide Barclays with the results of regular audit reports undertaken by an independent consultant, the Bank were satisfied with the company’s commitment to managing their environmental and social risks.

• Asbestos: managing the risks

  When Barclays was approached to provide working capital for the purchase of asbestos fibres and cement for a construction project in Africa, the business team referred the transaction to the Environmental Risk Management team.

  While the use of these products was legal in the countries where the company was operating, the use of asbestos, and asbestos-containing materials (ACMs), is banned in 44 countries around the world, with both the World Health Organisation (WHO) and the World Bank publicly discouraging their manufacture and use.

  After discussions with the risk management team around the potential risks to health in both the manufacturing and construction processes, and taking into account it was already banned in so many countries, we declined to participate in the transaction.

• Responsible investment

  Barclays was asked to provide a letter of credit to a company involved in manufacturing and selling a timber coating product which contained arsenic.

  After reading the relevant Group Risk briefing note, and discovering that the product was restricted in the EU in 2003, and banned under the EU Biocidal Products Directive in 2006, the transaction was referred to the Environmental Risk Management team.

  Research had shown that there were concerns that the chemical was carcinogenic, and could also change the DNA patterns of individuals handling wood that had been treated with it.

  While the product was legal in the country where it was intended for use, Barclays discovered that a proven alternative was available which was unrestricted and safer to use, and so declined to take the transaction any further.

• Environmental outreach in the banking sector

  Barclays is committed to supporting the Equator Principles – a framework designed to help banks around the world assess the environmental and social impacts associated with project funding.

  As part of an ongoing outreach programme, in 2009 we shared best practice with other financial services organisations at events in Africa and Europe.

  We represented the Equator Principles Financial Institutions at an environmental risk training event in South Africa. Hosted by the the United Nations Environmental Programme Finance Initiative (UNEP FI), the conference attracted delegates from 20 banks and other project-funding organisations from the region.

  We also contributed to the UNEP FI Global Roundtable in Cape Town, South Africa, attended by more than 450 representatives from the finance, government, media and business sectors from 41 countries.

  Colleagues from Barclays and Absa, a South Africa-based financial services organisation in which Barclays owns a majority stake, presented at a series of seminars on subjects including microfinance, human rights, environmental due diligence, project finance, agribusiness and dealing with contaminated land. Absa co-sponsored the event.

  In Europe, we shared our experiences in addressing environmental credit risk issues at a meeting in Lisbon, Portugal, hosted by the Luso-American Development Foundation (FLAD). The meeting was part of a scheme endorsed by FLAD, UNEP FI and Portuguese environmental consultancy Sustentare, aimed at supporting banks across the country in developing their environmental risk management capabilities.
   

• Managing risks in lending to UK companies

  All business loans in the UK provided by Barclays Corporate and Barclays Business, part of UK Retail Banking are assessed for environmental risk by our Relationship and Credit Risk Teams, supported by Barclays Corporate Environmental Risk Management.

  Where necessary, we have policies in place to assess specific environmental risks, for example, those associated with commercial land and property offered as security for a loan.

  Our panel of property and land valuers can use our bespoke environmental screening product, Barclays SiteGuard, to assess the commercial history of a piece of land and its potential for environmental contamination, as well as the implications of a site’s current or intended commercial use. Where appropriate, cases are then referred to Barclays Corporate's Environmental Risk Management team for review.

  Barclays Lending Managers also have access to a dedicated intranet which provides comprehensive information and guidance on managing environmental risk factors.

  Following a review of Barclays Corporate's implementation of the Environmental and Social Impact Assessment policy in 2009, additional environmental risk information was incorporated into credit risk training for customer-facing colleagues.
   

• Contributing to the climate change debate

  Our work on analysing and adapting to climate change and the business risks it presents continues to prove relevant to ongoing debates on the subject.

  In 2009, Barclays was invited to work with the UK government’s Department for International Development, co-sponsoring and co-authoring a report entitled Climate Finance, Business & Community: The Benefits of Cooperation and Adaptation. The report argues that regardless of the success and rate at which greenhouse gas emissions are controlled, some climate change is inevitable over coming decades and such changes may present risks or opportunities to business.

  Barclays representatives also contributed to a research paper by Professor Lord Stern of the London School of Economics, entitled Meeting the Climate Challenge: Using Public Funds to Leverage Private Investment in Developing Countries.

  Understanding that climate change is a global issue, we commissioned the Met Office Hadley Centre, one of the world’s leading centres of climate change research, to provide a comprehensive analysis of the economic impacts of climate variability in Africa.

  An emerging consensus places Africa as the continent most vulnerable to climate change, posing significant economic and social threats. The report, Storm Shelter: Managing Climate Risks in Africa, examines how climate factors affect business and the economy today and predicts how changes will have an impact in the future. We are working with our businesses across Africa to raise awareness of these issues and find ways in which we can mitigate risks to support our customers, clients and the communities in which we operate.

  Barclays also chairs the Climate Change Working Group of the Equator Principles network. The group provides a conduit for sharing perspectives on climate change issues between the Equator Principles Financial Institutions and the International Finance Corporation, part of the World Bank.
   

• Raising risk awareness in emerging markets

  As Barclays continues to expand in emerging economies, our Environmental Risk Management team is engaging with business banking teams around the world to raise awareness of the importance of environmental risk management for their corporate customers, including small to medium-sized corporate clients.

  Our focus is on potentially sensitive sectors such as manufacturing, chemicals trading, oils and lubricants, leather crafting, minerals and aggregates.

  We are also raising awareness of the Equator Principles framework for project finance transactions within such markets.