Social and environmental risks in the credit risk management system | ardshinbank

Social and environmental risks in the credit risk management system

Social and environmental risks in the credit risk management system

  1. Within the framework of credit risk management policy, the Bank shall bear the responsibility for the environmental protection and sustainable social development through lending activities implementation.  
  2. The main purposes of the Bank in the sphere of social and environmental risk management are as follows:
    1. To disclose and reject the loan disbursement to those customers, the activity of which has a negative impact on the environment and (or) has  a negative social consequence,
    2. To bring the probability of financial losses and decrease of the reputation of the Bank, in the result of social and environmental risks, to the minimum.
  3. In order to implement the purposes defined by Clause 2. hereof, the Bank shall give the priority to those customers, which comply with the standards defined by Clauses 4 - 11of the social and environmental compliance.
  4. Standard of social and environmental management system and evaluation: the requirement of the standard shall be to have a management system, which will enable the accurate evaluation of social and environmental risks and organization of the efficient management thereof. Elements of the social and environmental management are as follows:
    1. social and environmental risks evaluation system, 
    2. social and environmental risks management program,
    3. social and environmental risks management organizational system,
    4. staff training system,
    5. increase of public awareness and public structures involvement,
    6. monitoring and reporting system,
  5. Staff and labour conditions standard: The requirement of the standard shall be the human resources management appropriate to the volume of the organization and the number of employees involved, which will express the productive and economic relations management ideology. The human resources management shall be expressed in a clear and comprehensible style, available for all employees. In compliance with the above standard, the Borrower shall report to the Bank about their compliance to fundamental rights defined by RA legislation.
  6. Environment pollution prevention and decrease standard: The requirement of the standard shall be such technologies and practical methods, which will bring them to the minimum, and if possible, will exclude the impact of the technological cycle on the environment and natural systems. In compliance with this standard, the Borrower shall:
    1. Minimize, if possible, the emissions of harmful substances and greenhouse gases into the environment,
    2. Minimize, if possible, the waste generation,
    3. Implement the periodical monitoring of the environment,
    4. Be ready to reply to the external situations.
  7. Standard of population security and health protection. The standard requirement shall be to have a system of the risks evaluation and prevention of hindering of the security and health protection of the population in compliance with the volume of the organization and peculiarities of the activity, which includes as follows:
    1. The assessment of infrastructures and equipment security,
    2. Security rules of working with hazardous materials,
    3. Objectives of the environment and natural resources sustainable management,
    4. Assessment of the danger for disease among the population,
    5. Readiness to reply to the emergency cases,
    6. Mechanisms of informing the relevant public, state administration and local self-government bodies shall be developed.
  8. Standard for land use right acquisition and involuntarily resettlement. Taking into consideration the size of the company and peculiarities of its  activity, the requirement of the standard shall be to prevent the involuntarily resettlement of the local population, in particular the Borrower to compensate for acquired land and assets according to replacement value and/or in order to prevent the necessity of transgressing the vital interests to have such alternative programs which will allow assessing and taking into consideration to the maximum extent the balance of possible environmental, social and economic losses and gains, will foresee the adequate compensation, efficient system of considering relevant complaints.
  9. Sustainable management standard of biodiversity and natural resources: Taking into consideration the volume and peculiarities of the activity, the requirement of the standard shall be to have an evaluation system, which shall enable the disclosure of possible changes of the environment and shall influence the activities of the organization. One of the requirements of the standard shall also be to evaluate the possibility of new types origination and the possible influence thereof for the purpose of natural resources and biodiversity management.
  10. Local population standard: Taking into consideration the organization's volume and peculiarities of the activity, the requirement of the standard shall be to have a working system for evaluating, minimizing or preventing the social, environmental, cultural risks related to the interests of the local population, necessary compensation mechanisms for public awareness of the local population.
  11. Cultural heritage standard: Taking into consideration the volume and peculiarities of the organization activities, the requirement of the standard shall be to preserve the cultural heritage, improve the development thereof guided by RA and international legislation, international treaties.
  12. In order to implement the objectives specified in clause 2 hereof, the Bank shall not disburse or disburse loans with a restricted limit to the subjects involved in the following spheres of economy:
    1. Production and trade of products prohibited or recognized as illegal by RA legislation or international conventions and agreements (e.g. pharmaceuticals, pesticides, and herbicides, chemicals, ozone-depleting substances, polychlorinated biphenyls, transboundary trade in waste or waste products, materials containing mercury, wildlife regulated under “CITES”.
    2. Production of or trade in military weapons and munitions, including paramilitary materials
    3. Military uniforms production and trade,
    4. Alcoholic drinks (except wine and beer)  production and trade,
    5. Cigarettes production and trade,
    6. Casinos and other gambling games,
    7. Trade of such animals or product made thereof, which are subject to regulation of “CITES”,
    8. Production of radioactive materials and trade, this provision does not apply on the medical and quality assurance equipment,
    9. Production of unbonded asbestos fibers, trade or application; This does not apply to the purchase and use of bonded asbestos cement sheeting where the asbestos content is less than 20%.
    10. Production of  and trade in wood and other wood materials in non-controlled wood territories, including the purchase of logging equipment for use in primary tropical moist forests or old-growth forests.
    11. Acquiring wood materials and (or) refining at a preliminary wet stage,
    12. Production and trade of pharmaceutical materials prohibited by international agreements or subject to restrictions,
    13. Production and trade of pesticides,
    14. Production dangerous for health or forced, or another activity (voluntary principle violation or sanctions application or exploitation of the workforce (exploitation of children in such a work, which is dangerous for the health of children, hinders the training and negatively impacts on his physical and mental development and social integration),
    15. Production and trade of materials containing mercury,
    16. Production depleting the ozone layer and trade, subject to reduction.
    17. Production of dangerous chemicals with large volumes, trade, maintenance and transfer, or exploitation of such materials in industrial volumes,
    18.  Production deemed to be trespassing on the land of the local population or any other activity, unless another document agreement formed and approved properly on the use of relevant lands has not been acquired with that population.
    19. marine and coastal fishing practices using various-scale net fishing, harmful to vulnerable and protected species in large numbers and damaging to marine biodiversity and habitats.

 

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