ISBN 0-620-32746-4 September 2004 African Institute of Corporate Citizenship 9 St. Davids Place Parktown Johannesburg PO Box 37357 Birnam Park 2015 South Africa Telephone +27 (0) 11 643 6604 Facsimile +27 (0) 11 643 6918 [email protected] www.aiccafrica.org The principles of sustainability are becoming increasingly Deutsche Bank has been a partner of UNEP for years and important in our globally networked world where the has played an active role in a global network of companies, welfare of people, civil society organisations, companies, organisations and institutions that have set themselves the countries and supra-national organizations are closely goal of implementing the principles of sustainability. We intertwined. Sustainability stands for the precept of giving support projects in Africa through the Deutsche Bank Africa equal consideration to economic, ecological, and social Foundation, which was founded within the framework of aspects in all of our actions in order to achieve the goal of the World Summit on Sustainable Development (WSSD) in passing on a healthy environment, good business 2002, unofficially known as the Johannesburg Summit. conditions and a socially just basis for life to coming The Foundation primarily supports educational projects, generations. economic infrastructure programmes such as helping people to set up small businesses, or projects to fight HIV The African continent is facing major challenges, and it is and AIDS. Beyond these efforts we also support the Peace here where the strong effects business, ecology and social Parks Initiative in South Africa, Zimbabwe and Mozambique conditions have on each other are particularly apparent. as well as the Southern African Wildlife College. Peace African states are striving to achieve stable political, Parks combine the preservation of wildlife and the economic and social structures while preserving their environment with the creation of jobs thereby making an natural surroundings and Africa's fascinating wildlife. Africa important contribution towards the political and social wants to become accepted as an equal player in the world stability of the region. of global business. Thinking and acting in accordance with the principles of The UNEP (United Nations Environment Programme) and sustainability is of major importance for Deutsche Bank its members want to help African nations succeed in this within the bank itself and in fulfilling our responsibilities as enormous task. This applies especially to the African Task a corporate citizen within the international community. Force (ATF) established by the UNEP Financial Initiative (FI). Financial markets are deeply concerned with sustainability-related activities because of the pertinent advice and counselling involved in the actions of companies, institutions, transactions and project finance Hanns Michael Hölz, deals. The ATF views itself as a partner in projects, a guide Global Head, Corporate Citizenship & Sustainable wherever help is needed, and as an initiator of networks to Development, Deutsche Bank. facilitate the transfer of experience and ideas. Chairman UNEP FI. Page 2 Acknowledgements This report was prepared by Christina Wood and Sean de The Authors Cleene, with support from Paul Kapelus, Mokhethi Moshoeshoe, Anders Hein, Tagbo Agbazue, Nkosi Ndlovo Sean de Cleene and Sarah Ruck. Director and co-founder of the African Institute of Corporate Citizenship. Sean is The AICC Centre for Sustainability Investing joined with the currently based in Malawi, his main work is in UNEP Finance Initiative African Task Force to compile this the strategy formulation and management report. The report was made possible by finance from IFC implications for companies looking to Sustainable Financial Markets Facility, UNEP Finance mainstream corporate governance and Initiative, Finmark Trust, Nedbank and Deutsche Bank. corporate citizenship reforms in line with current business related sustainability concerns. In this regard he has The authors would also like to thank Robin Sandenburgh, worked extensively with the finance sector. Sean is co-chair Jonathan Wood, Louise Ford, Cas Coovadia, Zithulele Cindi, of UNEP Finance Initiative Africa Taskforce and a member Brian Pearce, Emma Hunt, Dan Siddy, Todd Hanson, of the initial FTSE/JSE SRI Index Advisory Committee. He is Niamh O'Sullivan, Paul Clements-Hunt, David Porteous, on the board of both the UK based Centre for Justin Smith, Lora Rossler, Dan Sonnenberg, Mike Oswald, Advancement of Sustainable Development Partnerships Lisa Christodoulou, Gertrude Lomas-Walker, Desmond and Business Consult Africa. Sean is a non-executive Ovbiagele, Kathryn Harding and the UNEP Finance Initiative director of Sustainability Research and Intelligence (data African Task Force for their support and critical insights. provider to the FTSE/JSE SRI Index). He is also a senior advisor on the Malawi and South Africa UN Global Compact and on the management committee of the University of South Africa Centre for Corporate Citizenship. [email protected] Christina Wood Christina Wood has over 10 years' experience in sustainability and environmental management. She has managed and undertaken numerous environmental impact assessments and audits in southern Africa and has also developed and delivered training programmes in environmental management to the private and public sector. She has worked extensively with the financial sector, and the infrastructure and mining sectors. Since 2001, she has been a consultant to the Environment and Social Development Department of the International Finance Corporation (the private sector arm of the World Bank Group). She has worked mainly with IFC financial intermediary clients, and has delivered Competitive Business Advantage training to this sector on behalf of IFC. Christina is an associate member of the UNEP FI African Task Force and is currently Programme Manager for AICC's Centre for Sustainability Investing. She lives in Johannesburg with her husband and son, and is passionate about art and travel. [email protected] Page 3 Executive Summary This report looks at the role of the financial sector in Africa • To use these examples to develop lessons for developing in promoting sustainability. Sustainability is about ensuring future innovative tools and approaches relevant to the long term business success, while contributing towards African context, and; economic and social development, a healthy environment • To provide a platform for the AICC Centre for and a stable society. There are three broad components of Sustainability Investing, UNEP Finance Initiative (FI) sustainability, sometimes referred to as 'people, planet and African Task Force (ATF) and other relevant organisations prosperity', or the 'social, environmental and economic' to develop mechanisms to ensure that sustainability dimensions. The need for businesses to address all three banking is taken forward in Africa. has been encapsulated in the concept of the 'triple bottom line'. The report identifies a number of innovations The report itself is not expected to represent a definitive demonstrating sustainability banking in different countries account of all finance sector sustainability practices in in Africa. Together, these provide a clear indication of Africa, but rather to provide a comprehensive initial change in the financial sector from the more traditional assessment with ideas for future action. The audience for defensive and narrow risk management approach, to being the report comprises finance sector institutions and policy more proactive, and promoting competitive sustainability makers who are working to improve the nature of the advantage. financial system in Africa. It will also provide a framework for organisations and stakeholders who are looking to The aim of the report is several fold: engage the finance sector in Africa around sustainability • To examine sustainability banking in an African context; related issues. In addition, it is expected that the report will • To analyse the role of the finance sector in promoting have a broader international audience who are interested sustainability - highlighting the challenges and in the challenges and distinct opportunities that investing opportunities that exist; into Africa can bring. • To create a basis for discussion and action upon which sustainability banking issues can be addressed; In undertaking the research for 'Sustainability Banking in • To initiate a dialogue around the London Principles, with Africa', five countries were chosen as focal case studies: the intention perhaps of generating an African version of South Africa, Nigeria, Senegal, Botswana and Kenya. Over the principles, that can then support the goals of NEPAD fifty financial institutions were interviewed, and a number of or be adapted to suit individual country requirements; others consulted. From these interviews, nineteen detailed • To highlight a series of current product, process and case studies were developed reflecting a range of product market innovations that demonstrate the increasingly and process specific innovations. A number of these are integrated nature of sustainability practice on the significant in their use of partnerships to attain the goals of continent; sustainability banking. Some of these partnerships are Summary of current practices demonstrating sustainability banking identified in this report Pricing Assets and Providing New Finance Risk Management Savings and Transactions Exercising Ownership •Financial Sector Charter