Managing ESE risk

The activities of our customers can have environmental, social and ethical (ESE) impacts including the potential for human rights infringements. In order to help us assess and manage these risks, we operate a reputational and ESE risk management framework. As part of this process, we conduct due diligence on customers and transactions, considering their impacts as well as expecting our customers to adhere to environmental, social and human rights standards.

RBS has ESE risk appetite positions for industry sectors, with potentially higher ESE impacts.  Where a customer operates outside of these sectors, we complete an assessment on them where an ESE Risk Concern is identified.

Read more about our ESE risk concerns [PDF 87KB]

Appetite positions define the level of risk the bank is prepared to accept, and our expectations of those companies to manage ESE risks. They are reviewed and updated regularly to take account of changes in regulation and good international practice.



During 2015, we developed two new ESE risk appetite positions for the adult entertainment sector and for companies involved in animal testing. We also completed further work to embed ESE and reputational risk management across the organisation. As part of this we developed a manual for employees that documents the end-to-end procedures for ESE risk assessments.

Download our appetite positions in full from our Sustainability downloads page

Read more about our approach to human rights

Country Reputational Risk Framework

We have developed a country reputational risk score model that assesses the reputational risk of RBS doing business in its chosen markets.

The scoring system takes into account political and money laundering risk, bribery and anti-money laundering risk, perceived corruption, and the country’s human rights record.

The model has been implemented in relevant parts of the bank to ensure that our operations in countries with high reputational risk are discussed and debated at a senior level. It is also being used in the screening of defence-related transactions.



In 2015, we saw a 35% reduction in ESE cases assessed – from 594 in 2014 to 385 in 2015. This reflects the continued shift of the bank’s geographical focus to the UK, with associated reduction of our exposure to potentially high risk activities within the energy and natural resources sectors.