Banco General´s ESMS (Environmental & Social Risk Management System)
Banco General is committed to Corporate Social Responsibility (“CSR”), Corporate Ethics and Sustainable Banking. As such, the Bank has developed its ESMS (Environmental & Social Risk Management System), SGAS (for its acronym in Spanish). Our system has been designed to analyze the environmental and social risks of our financing activities, and the way we detect and discuss environmental and social issues with our clients is through a site visit. This helps us identify any environmental risks or social aspects that the client may be missing or not covering adequately.
Our process involves identifying legal requirements (environmental & social) of projects within applicable national laws and asks clients/projects to present the Bank with all environmental impact assessments, permits or resolutions, and documents to be analyzed for compliance and risk identification.
We have a specialized department (Departamento de Ingenieria y Arquitectura, in Spanish), which monitors client compliance with legal documents and permits, including the receipt of construction permits, environmental impact approval resolutions and other related documents before disbursements can be made. Our clients must ensure the construction plans are approved by the respective authorities for water, waste, and fire and safety. Additionally, our ESMS states that clients must provide the bank with any follow-up reports required by the regulatory body (“MiAmbiente” in Panama) as determined in the environmental impact assessment approval resolution.
For corporate finance transactions that have a significant environmental impact (energy projects, for example), conditions normally require environmental audits or monitoring reports of compliance with environmental plans, mitigating factors and other guidelines that may be outside the local regulations (Equator Principles, for example). These reports are normally contracted to be prepared by an independent third-party.
BANCO GENERAL: TURNING SUSTAINABILITY INTO AN OPPORTUNITY
Like many other banks with development bank funding, as suggested, Banco General began to structurally address the E&S risks in its lending operations. Banco General identified the significant value of this development to tie-in and strengthen the Bank’s policies and programs of Corporate Social Responsibility and ethical lending. Once Banco General had successfully implemented an ESMS, the bank identified that sustainability could be a differentiator among peers in the crowded financial sector in Panama (over 45 general-licensed banks on 4 million inhabitants). Top management wanted sustainability and responsible lending to be key drivers for business and help add value to client relationships.
Banco General learned of the possibility of setting up a credit line for environmentally friendly projects, for this reason a joint team conducted a market study to identify potential target groups where a ‘green credit facility’ could be a solution. In 2011, external consultants provided technical assistance to help Banco General identify the environmental parameters for eligibility. The technical assistance proposed potential activities such as small-scale renewable energy, design and construction of sustainable buildings, energy efficiency investments, integrated waste management, water and wastewater treatment, and other carbon mitigating investments.
Panama is a country where energy costs are among the highest in the world and the strong economic growth has triggered companies to think about their access to renewable resources and the efficient use of energy and water.