We’ve not always been vocal about it, but Standard Chartered has been engaging with clients on how to manage their environmental and social impacts since 1997. Recently, the publication of our new “Prohibited Activities” list gave us an opportunity to draw on that experience and to think about the activities we believe are incompatible with sustainable economic development.
Key amongst those is something we’ve been working on for some time—exploitation of UNESCO World Heritage Sites (WHSs). There are thousands of such sites across the globe, but they represent only a tiny portion of global landmass. They all have one thing in common; their Outstanding Universal Value (OUV), a group of 10 criteria laid out by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) that show why each World Heritage Site has unique cultural or natural characteristics and needs protecting.
This value is what makes them such special places—needing extra support to be conserved for future generations and to continue to act as places that inspire us all. Unfortunately, in some cases, governments or companies don’t act in ways that ensure this.
The concept of Outstanding Universal Value was critical as we developed our approach. Economic activity, carefully managed, can be carried out in UNESCO World Heritage Sites—just consider the growth of ecotourism, which helps to protect and promote cultural heritage and the environment. But there are some activities, often mining or extraction of oil and gas, which can cause irreversible damage to a site’s OUV.
That damage is why we, as a lender, should be concerned. Even if development of a site is allowed today, changes in government policy may prohibit it in the future. Companies that have caused damage may be pursued for compensation, although some of the actual damage may be irreversible. Which is why even if development on such sites proceeds unchecked, communities can challenge companies and withdraw their social licenses to operate. As a lender taking a long-term perspective on clients’ financial health, we are committed to protecting sites with Outstanding Universal Value. A recent statement of commitment by members of the UN Environment’s Principles for Sustainable Insurance suggests we’re not alone.
It’s one thing to make a statement, but another thing to put it into practice. We ask all of our clients about whether they have policies in place to protect World Heritage Sites, and then undertake detailed due diligence when lending towards specific projects that may impact sites.
In this, we have been supported by engagement with UNESCO and World Wide Fund for Nature (WWF). WWF has been a longstanding champion of World Heritage Sites and in collaboration with ECOFACT brought a number of banks together in 2016 for a series of collaborative workshops and individual discussions. Through these, we shared experiences and discussed the challenges of making policies work in practice. WWF made a series of recommendations to each individual bank on areas in which best practice could be adopted, and we’ve enjoyed their ongoing support as we have looked at these.
The outcome has been a framework that will hopefully allow us, through our frontline bankers, credit approvers, and central environmental and social risk teams to identify situations in which the Outstanding Universal Value of a World Heritage Site may be at risk, and either work with our clients to put in place controls to prevent this, or decline to participate in transactions or support particular companies. Some practical examples of this are shown in the box below.
Ideally, we don’t want to find ourselves in a situation in which we decline a transaction; UNESCO has for some years been encouraging extractive-industry companies, and banks, to publish “no go” commitments in relation to World Heritage Sites. This is an important part of raising awareness—we have recently lodged our own approach and are calling on others to do the same. Those organisations mentioned above have a wealth of experience and are very willing to share it with those who are sincere in their intent to develop robust policies.
PHOTO ATTRIBUTION: © JORGE SIERRA / WWF-Spain | A group of Greater flamingos in a marsh, at sunset, Donana National Park, Andalucia, Spain