Soft Commodities Compact
RBS has an established Environmental, Social and Ethical (ESE) risk management framework to help assess and manage such risks associated with certain clients and activities. The purpose of such due diligence is to help establish the commitment and capacity of customers to manage the potential impacts in accordance with international standards. The framework is comprised of a Forestry, Fisheries and Agribusiness policy. That sector policy covers the production of rubber, pulp & paper, timber, palm oil & soy and is broadly aligned with the goals of the Banking Environment Initiative’s (BEI) ‘Soft Commodities Compact’.
Other sustainability related benchmarks reflected in our policy are the Roundtable on Sustainable Palm Oil, The Better Cotton Initiative, Roundtable for Responsible Soy, Global Roundtable for Responsible Beef, Bonsurco, Fair Trade and the Aquaculture Stewardship Council.
If our due diligence reveals that a company’s operations do not adhere to the relevant sustainability related benchmarks, they are expected to establish an action plan to achieve such certification within a set timeframe. If our due diligence reveals that a company’s business activities present an unacceptable level of risk to the Bank, then a decision is taken not to finance the company.
Our exposure to the Forestry, Fisheries and Agribusiness sector generally arises from general corporate lending rather than investment. Our Forestry, Fisheries and Agribusiness ESE risk appetite statement – which is applicable to our general lending activities - is reviewed annually to ensure it is in keeping with international agreements, UK regulations and general good practice. If this process reveals that there is a need to revise our ESE risk appetite positions, then the necessary changes are made.
In 2015, we saw a reduction in the number of clients falling under the scope of the Forestry, Fisheries and Agribusiness ESE risk policy. That reduction is principally attributable to a decision by RBS in February 2015, to substantially reduce its international operations and become a smaller UK and western Europe-focussed bank. Given the stronger governance framework of the countries in which we maintain a presence, the general expectation is that the ESE risk profile of clients within the Forestry, Fisheries and Agribusiness sector will improve.