ADFIAP releases environmental governance tools for banks

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The issue of environmental governance has been and will always be in the forefront of ADFIAP’s activities. ADFIAP’s ‘Greening of DFIs‘ Project is its collective and responsive effort to pursue sustainable development through its adherence to the principles of a safe and clean environment, not only as part of good corporate citizenship, but more importantly, as an integral part of sound business practice.

- ADFIAP Board of Directors

For many years, the banking sector in general did not consider “greening” the industry a relevant issue. Being in the non-polluting service sector, in contrast to the traditional industry sectors with high external environmental effects, banks were not the focus of discussion with regard to environmental issues.

This situation started to change in the early 90’s. With legal and stakeholder concerns such as lender liability on environmental miscues, plus a growing public awareness due to the leverage effect of investments, the banking sector faced new challenges. Environmental issues suddenly became a part of their daily business, consequently embracing new principles and practices of environmental performance evaluation, risk management, and due diligence.

Development Finance Institutions (DFIs) in emerging markets and developing countries are no exceptions to this trend. Mostly set up by their local or national governments as specialized financial institutions providing long-term financing and technical assistance to economic sectors to vitalize the country’s development and growth, the DFIs’ outlook for environmental issues has been a minor concern for many years.

In 1998, member-DFIs of ADFIAP launched the "Greening of DFIs" project to promote and institute environmental due diligence in lending. Initially supported by the USAsia Environmental Partnership, a USAID initiative, ADFIAP ran capacity building programs, including Board-approved environmental policies, setting up of environmental monitoring units and achieving ISO 14001 certification.

This present EU project will build on the experience of the "Greening of DFIs" project.