Association for Sustainable and Responsible Investment in Asia
Investors Initiatives
 

Recommended reading materials:

Domini Social Investments - Proxy Voting Guidelines on Chemical Safety
http://www.domini.com/shareholder-advocacy/index.htm

Domini Social Investments is a US-based investment firm specializing in socially responsible investing with US$1.8 billion under management. As part of its main goals to encourage a higher level of corporate responsibility, Domini was the first mutual fund manager in the US to publish its proxy votes back in 1991 and has since been actively engaging in corporate management through proxy voting and shareholder dialogues. Domini Proxy Voting Guidelines provide useful guidance on a wide range of issues for corporations as well as investors.

The guidelines also cover the issue of toxic chemical substances. They clearly mention that companies face increased risk of market exclusion, damage to reputation, interruption of supply chains, and potential lawsuits. Therefore, to protect and enhance shareholder value, companies should know what toxic chemicals are in their products, and work to lower toxic hazards and their associated costs. Toxicity of mercury, PVC and phthalates are specifically singled out in the guidelines as a cause for concern regarding their impact on human health and the environment.

Equator Principles - A financial industry benchmark for social & environmental risk in project financing
http://www.equator-principles.com/documents/Equator_Principles.pdf

The Equator Principles provide a banking industry framework for addressing environmental and social risks in project financing. In October 2002, a small number of banks convened in London, together with the World Bank & IFC, to discuss these issues. The result was the drafting of the first set of Equator Principles launched in June 2003. The principles have been adopted by 45 major financial institutions over the past three years.

The Equator Principles are the first set of standards in the private financial sector for assessing and managing environmental and social risk in project financings. This is expected to help accelerate momentum in other areas of environmental and social responsibility in the sector. In July 2006, participating banks announced a newly revised version of the principles taking into account those lessons learned from early implementation and comments from a variety of external stakeholders including clients and NGOs.

The Principles apply to all new projects financed globally with total project capital costs of US$10 million or more, and across all industry sectors. Participating financial institutions are advised to utilize the two sets of environmental, health and safety (EHS) guidelines used by IFC. In relation to chemicals substance issues, the EHS guidelines cover areas such as:

IFC Guidelines and Policies Referenced in the Equator Principles can be found on the following website: http://www.ifc.org/ifcext/enviro.nsf/Content/EnvironmentalGuidelines

Ethical Funds Company - Six Ethical Principles & Proxy Voting Guidelines
http://www.ethicalfunds.com/do_the_right_thing/sri/ethical_principles_criteria/

Ethical Funds is Canada's leading manager of socially responsible mutual funds. Ethical Funds' socially responsible approach starts with complying with its six 'Ethical Principles', one of which is to invest in corporates with environmentally responsible practices. Under such principles, Ethical Funds evaluates companies based on the following criteria: (1) implementation of an effective environmental management system; (2) level of commitment to the disclosure of environmental practices; (3) compliance with environmental regulation; (4) existence of production processes designed to minimize or eliminate the use and release of toxic or hazardous substances, etc.

Ethical Funds 'Proxy Voting Guidelines', which was disclosed first in Canada in 2002, also suggest comprehensive guidance on how the company as a mutual fund manager can vote on each issue for companies in its portfolios. On the toxic substance issue, the guideline specifically outlines that Ethical Funds supports proposals to help reduce the use and therefore ultimately phasing out of those harmful substances such as PCBs, PVC, mercury, chlorine, and dioxin.

HSBC Group - Chemical Industry Sector Guideline
http://www.hsbc.com/hsbc/csr/our-sustainable-approach-to-banking/products-and-services

As one of the four sector guidelines published by the group to date, HSBC revealed its "Chemical Industry Sector Guideline" in August 2005 to ensure that its business activities in the sector comply with internationally accepted standards and do not cause any adverse reputational impacts. The guideline applies to the group's financial services including lending, debt/equity capital markets activities, project financing and asset management, with the coverage including agricultural chemicals, petrochemicals, specialty chemicals and gases.

It also sets out broad principles of good chemical production and handling, helping its customers to work towards sustainable chemical management. Although the HSBC Chemical Industry Guideline only suggests a very broad guidance, the group's move is regarded as important given the fact that HSBC is the only bank among major banks around the globe that has its own chemicals policy set so far as of 2007.

International Finance Corporation (IFC)
http://www.ifc.org/ifcext/enviro.nsf/Content/Home

IFC was established in 1956 as the private sector arm of the World Bank Group. Its mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC applies its own "Environmental & Social Standards" to all the projects it finances to minimize their impact on the environment and on affected communities. These standards clearly define IFC's responsibility in supporting project performance and also give direction to IFC officers in reviewing compliance and implementation of private sector projects. The standards also require clients to take great responsibility for managing their projects and for receiving and retaining IFC support. Disclosure of information usually comes prior to the requirements. IFC also has set additional guidelines including:

The Global Environment Facility (GEF)
http://www.gefweb.org/projects/Focal_Areas/pops/pops.html

The GEF, established in 1991, helps developing countries fund projects and programs that protect the global environment, with a particular focus on the six focal areas: biodiversity, climate change, international waters, land degradation, the ozone layer, and Persistent Organic Pollutants (POPs). As for the ozone layer, the GEF, in partnership with the Montreal Protocol of the Vienna Convention on Ozone Layer Depleting Substances, has funded projects that enable some countries in Eastern Europe and central Asia to phase out their use of ozone destroying chemicals.

The GEF has long been involved in tackling threats posed by POPs since the late 1990s when the first set of its strategically designed projects was developed. These initial activities allowed it to respond promptly to requests for support from the negotiators of the Stockholm Convention for implementing the Convention. This in turn led to the adoption of the Guidelines by the GEF for POPs-enabling activities in May 2001 upon the adoption of the Convention.

World Bank - Environmental Health & Toxic Chemicals
http://web.worldbank.org/244381,00.html

One of the main objectives of the World Bank's Environment Strategy is to improve the quality of life in its client countries. This is, in part, achieved through protecting people's health from environmental risks and pollution to reduce the threat of disease. Particular emphasis is given on the strategy to reduce exposure to toxic substances.

At a global level, the World Bank is an implementing agency of the GEF, the Multilateral Fund for the Montreal Protocol, and the Convention to Combat Desertification and a primary funder of projects in support of the Biodiversity Convention and the Stockholm Convention on POPs. At the project level, in collaboration with GEF and countries, World Bank work includes: (a) reducing the impact of pesticides and other chemicals in its country work programs; (b) developing alternatives to toxic chemicals (e.g. termiticides for China); and (c) safely managing stockpiles of POPs.

 

Recommended reading materials:

Shaping the Future of Sustainable Finance: Moving from paper promises to performance - Chemicals
http://www.banktrack.org/?mc=2&cat=123

"Shaping the Future of Sustainable Finance: Moving from paper promises to performance - Chemicals" published by Bank Track together with WWF in January 2006

EBRD Environmental Guidelines for the Insurance Sector
http://www.ebrd.com/enviro/tools/procedur/insure.pdf

EBRD Environmental Guidelines for the Insurance Sector, which also include:

  • Annex 1 - UNEP Statement of Environment Commitment by the Insurance Industry
  • Annex 2 - EBRD Environmental Exclusion and Referral List for Financial Institutions (chemicals policy included)
  • Annex 3 - Environmental Risk Categorization List (all sector including chemicals)

The CERES Principles
http://www.ceres.org/coalitionandcompanies/principles.php

The CERES Principles were developed as a set of ten principles by the Coalition for Environmentally Responsible Economies (CERES), which was formed in 1989 in the wake of the Exxon Valdez disaster. The principles aim to guide corporate decisions that affect the environment, leading the signatory companies to commit to (1) work toward positive goals, such as the sustainable use of natural resources, energy conservation, and environmental restoration; (2) set definitive goals and a means of measuring progress; and (3) inform the public in an environmental report published in the format of a CERES report.

 

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