An extractives sector client approached Barclays for a general corporate purpose loan - a type of funding to which the Equator Principles do not apply, as it is not project finance. However, since the company operates in an environmentally-sensitive sector, the Barclays Environmental Risk Management team conducted a corporate-level environmental and social risk review of its business.

This type of review is designed to provide a general view of the company and its approach, capacity and commitment to managing the environmental and social issues associated with its business operations. The first stage of the assessment was a review of the company disclosures and other material in the public domain.

Public statements

The company had recently published a sustainability report which had been verified to a rigorous standard by an internationally respected auditing firm.  This provided comfort that the statements in the report were factual and evidenced by substantial supporting data.

As the sustainability report showed, each business operation within the group had developed relevant objectives and targets to ensure implementation of ISO14001 for environmental management, OHSAS 18001 for health and safety, and SA8000 for social accountability.  Environmental and social impacts had been identified. Areas for improvement had been put in place. The company had also identified a number of reporting indicators, and was reporting progress against these in line with the Global Reporting Initiative (GRI) framework.

The review also revealed the extent of the company’s support for environmental protection measures and community programmes in the previous year. This included greenhouse gas emissions reduction initiatives that qualified for Clean Development Mechanism (CDM) status.

Active engagement

Balancing these largely positive findings, Barclays review also revealed some criticism of the company’s operations by external commentators, focusing on its environmental management and relationships with local communities. So the second stage of the assessment was to engage with the client on these issues.

To do this, the Environmental Risk Management team held a conference call with senior representatives at the company to clarify the specific issues raised by stakeholders. The client briefed the team on the issues in question, detailing the actions already underway and how it planned to address the concerns.

The Environmental Risk Management team also attended a meeting with the company to discuss its environmental, social and sustainability strategy more generally. This underlined that the company’s commitment to managing these issues was reinforced by a clear and explicit strategy to benchmark its performance against international standards, participate more fully in ethical indices, and be more proactive in its future public disclosures.  Overall, the assessment concluded that the client’s approach to managing social and environmental risks was satisfactory.