Foreign banks foster sustainable development

Andi Haswidi, The Jakarta Post, Jakarta

The Foreign Bank Association of Indonesia (FBAI) has formed a special working committee on sustainable development that aims to formulate a standard for best lending practices to be adopted by FBAI members.

Speaking during a discussion on sustainable lending, the CEO of HSBC Indonesia, Richard McHowat, who also heads the FBAI, said Wednesday the committee was in the early stages of identifying the practices of its members in Indonesia and promoting awareness on sustainable development.

The FBAI was formed in February 2006, and includes as members ABN Amro, CitiBank, Rabo Bank and Standard Chartered, as well as joint venture banks. The association currently boasts 33 members.

"In formulating the standard for best practices, we will adopt the global standard of best practices for sustainable development and adopt it into an Indonesian context," McHowat said.

"For us, it is no longer about the willingness to implement sustainable best practices, but more about prioritizing them while waiting for the right moment."

As an example, McHowat said that under his company's environmental risk standard, it must ensure that all decision-making processes fully address environmental-risk assessment and establish suitable procedures for dealing with proposed transactions of an environmentally sensitive nature.

"We have been around from 121 years and we do not want to ruin our reputation by supporting a project that is potentially harmful for the people and environment," he later told The Jakarta Post.

Amol Titus, HSBC Indonesia head of risk analysis and sustainability, said that companies that embraced the principles of sustainability actually improved their chances of securing longer-term viability and success as they became more "bankable."

"HSBC in Indonesia has already started to develop portfolios of customers whom we regard as sustainable and the Bank is supporting them by providing a range of facilities, including working and trade capital, cash management and foreign exchange services," he said.

Sustainable development seeks to relieve poverty, create equitable standards of living, satisfy the basic needs of all people, produce sustainable economic growth and establish sustainable political practices, while taking the steps necessary to avoid irreversible damage to natural capital.

It does not focus solely on environmental issues as it also encompasses three general policy areas: economic, environmental and social.

Also speaking during the seminar was WWF Indonesia executive director Mubariq Ahmad, who described some of the challenges in bringing Indonesian corporations on board.

According to Mubariq, the foremost challenge in convincing corporations in Indonesia to adhere to environmental principles was the difficulty involved in identifying and contacting their owners. This was particularly true of those in the forestry business.

Globally, HSBC has announced a five-year US$8 million environmental partnership with the Smithsonian Tropical Research Institute to fund the largest-ever experiment on the effects of climate change and how it will affect the world's forests.