can bankers provoke the “action”? · provoke the “action”? gerard holden managing director...

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Corporate Social Responsibility: From Words to Action Can Bankers Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital

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Page 1: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

Corporate Social Responsibility: From Words to Action

Can Bankers Provoke the “Action”?

Gerard HoldenManaging DirectorGlobal Head of Mining & MetalsBarclays Capital

Page 2: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

The Key Issues

l Do Voluntary Initiatives Work?

l What Can us Bankers do to Ensure that these Initiatives can be Effectively Implemented?

Page 3: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

From Words to Action – The Barclays Approach• 1991 restated its Environmental Policy

• Sustainability of Environmental Resources

• Environmental Impact Assessment

• Environmental Risk is part of every Credit Appraisal

• 1992 Established Environmental Risk Management Unit

• 1999/2000 Appointment of Environmental and Equity and Diversity Directors and Publication of Full Environmental and Social Review

• Involvement in MMSD through the Assurance Group

Page 4: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

Voluntary Initiatives and Mining Finance

l Historically these Initiatives have not worked well

l Introduction and Adoption of the World Bank Environmental Guidelines a Success

l Most Lenders use the Guidelines in the Absence of more Rigorous Local Legislation

l Requires Ongoing Monitoring after Initial Strict Due Diligence (Effective Policing)

Page 5: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

Social Responsibility and Mining Finance

l Environmentally Responsible Production

l Good Socio-Environmental Practices lead to a reduced risk profile

l Credit ratings now take Socio-Environmental Record into account

l Reduced risk = Cheaper Funding

Page 6: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

The World Bank Guidelines and Mining

l The 4 Broad Principles Behind Voluntary Initiatives:

l Impact

l Detail

l Development Process

l Sponsoring Institution

l World Bank Guidelines are taking hold and are thus a Partial Success

l Need for Revision through Consultation

Page 7: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

Mining’s Record So Farl A Fragmented Industry, Poor Investment Discipline

and Returns

l History of State Control

l Declining Metal Prices

l Little Incentive to Adopt Good Practice Voluntarily

l Consolidation will make Voluntary Initiatives Easier to Adopt

But:

l Who Bears the Cost?

Page 8: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

The Influence of Financiers

l Capital is the Industry’s Lifeblood

l Encouragement by Financial Institutions to Adopt Voluntary Initiatives

l It’s Happened Before: The World Bank Environmental Guidelines

l Banks can act as Common Link

l Adoption of Voluntary Initiatives CAN be Achieved

Page 9: Can Bankers Provoke the “Action”? · Provoke the “Action”? Gerard Holden Managing Director Global Head of Mining & Metals Barclays Capital. The Key Issues lDo Voluntary Initiatives

Corporate Social Responsibility: From Words to Action

Can Bankers Provoke the “Action”?

Gerard HoldenManaging DirectorGlobal Head of Mining & MetalsBarclays Capital