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Managing risk

Managing social and environmental risk in lending

Barclays has a governance structure in place to facilitate clear dialogue across the business around issues of potential environmental and social risk.

Our approach and governance

Our approach to social and environmental risk management is based on a combination of policy and guidance. This enables us to adopt a robust approach, while maintaining the flexibility to consider potential clients and transactions on their respective merits.

Our focus on risk means that environmental and social issues are incorporated into our core credit decision-making process.

Barclays has a dedicated environmental and social risk management team in place to advise on transactions of all types where there are potential environmental or social sensitivities. The team is part of the Risk function and automatically reviews any project finance application for more than £10m, as stipulated by the Equator Principles. It may also have applications below this threshold, and other types of transaction referred to it that involve sensitive sectors or regions, where deemed appropriate.

Our industry-specific risk guidance notes cover more than 50 environmentally and socially sensitive activities across 10 different sectors. These 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.

If you would like copies of these guidance notes, please email citizenship@barclays.com

For more information on how Barclays manages its social and environmental risks, please refer to our Citizenship Report 2012.

The Equator Principles

Our Environmental and Social Impact Assessment policy is the mechanism by which Barclays applies the Equator Principles – a voluntary framework banks can use to address the environmental and social risks of project financing.

Barclays was one of four banks which collaborated with the International Finance Corporation (IFC), part of the World Bank, to draft the Equator Principles in 2003, based on internationally recognised standards. Since then, they have been adopted by more than 73 banks from 25 countries.

The Equator Principles have established greater consistency and transparency around banks’ requirements for non-financial organisations engaged in project funding transactions. This in turn has prompted such organisations – for example, law firms, construction companies and project sponsors themselves – to consider environmental and social factors in their approaches to these developments. We remain actively engaged with the initiative, and we are the current co-lead of the Climate Change Working Group. Barclays was involved in the recent update of the Equator Principles, launched in June 2013, and we will update our Social and Environmental Impact Assessment policy to reflect new requirements.

We report project and transaction data in line with the Equator Principle requirements; read more in our Citizenship Report 2013.