Responsible financing : Environmental and Social criteria **
Objectives :
- To control the respect of Equator Principles in the activities of corporate and investment banking
- To contribute actively to the governance of the EP1
The priorities for 2009 :
- To continue to assist and supervise the bank's business lines in the implementation of E&S2 procedures (Natethic and Projethic)
- To develop and provide training on E&S2 risks for all staff exposed to them
- Implementation of a process to pursue broadening the scope of the Equator Principle
2008 highlights :
- voted onto the Steering Committee for the Equator Principles and participation in 5 working groups,
- improved quality controls and internal reporting on project appraisals by teams,
- module set up on the intranet to assist teams in implementing the "Projethic Step by Step" procedure.
Société Générale's Natethic and Projethic procedures were developed to manage E&S2 issues linked to the bank's financing activities. Their purpose is to identify, assess, reduce, limit and monitor any potential E&S2 risks.
NATETHIC
The transactions managed by the commodities financing division which cannot be linked to a physical project are evaluated by Natethic (E&S2 counterparty rating) via a questionnaire on the qualitative and quantitative criteria revised and validated each year. The information sources are documented to allow for an audit of the results.PROJETHIC
At the same time, Projethic was rolled out in the project financing business line in 2007 and an Environment team set up to monitor and control its implementation throughout the Group's Investment Bank. Projethic is the internal procedure for the environmental and social assessment of transactions directly linked to a physical project (project financing, advisory mandates, export loans, leasing, etc.). For project financing transactions, it implements the Equator Principles adopted by the Group in September 2007Projethic Step by step:
- Categorisation is the first step in the E&S2 assessment of a project. It is used to identify any potential E&S2 risks linked to a project (category A where there is potentially a high risk, B for an average degree of risk and C where risk is limited) and to the client in charge of the project (1 where there is a high client risk, 3 where client risk is limited). Client risk is assessed according to its capacity to manage and resolve any E&S2 issues (commitment, resources, track record). In the interests of consistency, categorisation is determined using the same, standard tool for all projects.
- E&S2 requirements vary according to the categorisation of the project in question: requests for additional information, review of documentation submitted by an independent expert, public disclosure and content of the action plan, initiatives taken and measures planned to reduce or offset the risks identified wherever possible. The loan documentation legally binds the client to comply with the agreed action plan and local legislation and international standards. The client's compliance with these different obligations is evaluated by regular reports (reviewed by an independent expert).
- Approval channel The Environment team validates the categorisation of each project. For sensitive projects (categories A and B) in emerging countries, a report on any potential E&S2 impact or a review by an independent expert is included in the credit dossier along with the action plan and loan documentation for a project. If the project is deemed to comply with international standards, it is then referred to the Risk Division which conducts its own control of E&S2 analysis of the business line.
* Verified by Ernst & Young (see Statutory Auditors' Report ) ** As per our commitment under the Global Compact
NOTES
- Equator Principles
- Environmental and Social