Managing risks in lending and investments
Barclays has a longstanding commitment to managing the environmental and social risks associated with commercial lending and investment products. We recognise that environmental and social impacts may result indirectly from some of the financial products and services we provide to business customers. To address this issue, we take due account of these potential risks and adhere to stringent ethical policies and principles.
Project financing and the Equator Principles
Barclays Environmental and Social Impact Assessment (ESIA) Policy is the mechanism by which we apply the Equator Principles – a voluntary framework banks can use to manage the environmental risk and social impacts of project financing.
Barclays was among the first businesses to collaborate with the International Finance Corporation, part of the World Bank, in drafting the Principles in 2003. Now more than 60 banks globally have committed to the framework and apply the Equator Principles to all project financings with capital costs of more than US$10m.
Barclays ESIA Policy has no minimum threshold and covers the business worldwide. It is applied whenever Barclays is considering providing finance, advisory services or other professional support to projects in potentially sensitive areas.
Environmental and Social Impact Assessments are carried out by independent consultants. Our aim is to ensure we have access to an objective, comprehensive and risk-based report on the environmental and social risks associated with a project.
Client compliance
As part of the ESIA process, before committing to a project financing agreement, Barclays must be assured potential clients will meet our requirements in a number of areas. These include working within recognised best practice guidelines and respecting values relating to human and economic development, ecological and physical resources.
If the action required to bring a project in line with our ESIA process and the Equator Principles is too challenging to implement, or if a client is unwilling to meet Barclays terms, we will decline to participate in the project. However, as a general rule we prefer to collaborate to improve project standards, rather than simply step aside to allow a potentially less environmentally or socially inclined financial institution support the transaction.
Industry-specific guidance
In 2006, we extended our industry-specific risk guidance to cover more than 50 environmentally and socially sensitive sectors. These guidance notes include an overview of each sector’s regulatory situation and the measures Barclays would expect companies in that sector to take to identify and manage relevant risks.
The industry sectors covered by Barclays guidance notes are:
- Agriculture and fisheries
- Metals and mining
- Oil and gas
- Power generation, supply and distribution
- Chemicals, pharmaceuticals manufacturing and bulk storage
- General manufacturing
- Utilities and waste management
- Infrastructure
- Service industry
- Forestry and logging
Our sector-specific guidance notes are available on request from sustainability@barclays.com
Environmental and ethical funds
Barclays Global Investors (BGI) is one of the largest asset managers in the world, with more than $2trillion under management for individual and institutional clients. Close to $60billion of this is invested in environmental and ethical funds.
BGI is the world's largest manager of exchange-traded funds, under the iShares brand. iShares offer BGI clients the flexibility to invest across a broad range of indices, including those focusing on environmental, social and governance criteria, such as the iShares KLD Select Social Index Fund, iShares XEN Jantzi Social Index Fund and the Dow Jones EURO STOXX Sustainability 40.
Corporate governance: investments
Barclays Global Investors promotes strong corporate governance of the companies in our investment portfolios, to protect shareholder value for clients. BGI’s votes at company AGMs reflect this approach.
BGI regularly engages with companies on issues that could have a significant impact on the value of clients' holdings. This is done through face-to-face meetings with senior management and board members, or through written communication.
BGI is active in a range of corporate governance organisations including the International Corporate Governance Network, the Council of Institutional Investors, the Stanford University Institutional Investors Forum, the Australian Investment and Financial Services Association, and the National Association of Pension Funds in the UK.
