Impact of Environmental practices on Financial Management

(Bogota, February 27, 2007). Invited by the Andean Development Corporation (CAF) representatives of the banking superintendencies and associations of Bolivia, Peru, Colombia, Venezuela, and Ecuador met in the CAF offices in Bogota to participate in the workshop Good environmental practices in financial management.

The workshop is part of the Program for Promotion of Sustainable Development in Financial Institutions - PPDSIF - which the Corporation is sponsoring through its environment department as a contribution to the environmental sustainability of the financial sector.

Precisely to develop this program, over the last five years CAF has organized various activities aimed at disseminating information and training the financial entities of the region in environmental and social responsibility. The reports, achievements and lessons learned from these workshops have been collected in four publications available on the CAF website (www.caf.com).

The world financial sector has become aware that positive and negative environmental and social impacts can have an important effect on the risk profile and profitability of projects and companies, and that these effects are transferred directly to the value chain of their investors and financiers. For this reason, and as a commitment to environmental responsibility, the sector has become increasingly involved in the knowledge and practices required to identify, evaluate and manage the environmental and social risk of its operations, and capitalization of the opportunities represented by the new emerging environmental markets.

On this occasion, the objective of the CAF workshop was to promote reflection among the financial institutions and regulatory bodies of the region on the need for agreements and regulations on environmental and social matters, as a tool to guarantee the environmental sustainability and social responsibility of the projects and activities financed by them.

During the opening of the workshop, CAF environment director Maria Teresa Szauer repeated the Corporation’s interest in working to favor environmental issues, emphasizing that environmental practice in financial management is a neglected area in Latin America.

She said that activities planned for this year include creation of a virtual training course in environmental management for CAF partners and clients, as well as national workshops on analysis of environmental risks. These activities are additional to those generated by the proposals for joint work which emerge from today's workshop.

For their part, the banking superintendencies and associations expressed interest in cooperating with CAF on developing a working agenda to identify and manage the environmental and social risks associated with investment projects and produce training instruments to improve the activity of financial institutions in this area.