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ENVIRONMENT DAY: Freshwater Banks a Little on HSBC

Sanjay Suri

LONDON, Jun 3 2005 (IPS) - A new initiative from the HSBC Bank to support freshwater has won backing from the international group WWF, seen as an important step in growing cooperation between multinational private sector giants and leading environment organisations.

Under the new Freshwater Infrastructure Guideline, HSBC, the world’s second largest bank, will seek to finance projects that support freshwater where the circumstances warrant, and to withhold funding from projects that are not consistent with the bank’s strategy for corporate social responsibility.

The HSBC offer includes some specific commitments. It has pledged to provide funding for dams only so far as it is consistent with the recommendations of the World Commission on Dams.

The HSBC is also committed under its guidelines to conservation of globally important wetlands protected under an inter-governmental treaty known as the Ramsar Convention, signed in the Iranian city of that name in 1971.

The HSBC guidelines follow its forest land and forest products sector guidelines released last year.

HSBC has a policy now of ”taking advice not just from environmental groups but all sides of civil society,” HSBC adviser on the environment Francis Sullivan told IPS. ”We may not agree with everything every group says, but it is important to take those views into account.”

The freshwater initiative, he said will be ”a major opportunity to help achieve sustainable development” and to support efforts towards meeting the Millennium Development Goals (MDGs). Goal 7 is to halve the number of people without sustainable access to water services by 2015. The estimated cost to achieve this is 180 billion dollars.

Under the policy, Sullivan said, HSBC will ”provide finance to customers who are going to provide water for drinking and agriculture in ways that are consistent with a positive social and environmental development impact.” Many people have no access to much-needed freshwater, and the HSBC therefore wants to become more active in this field, he said.

At the same time, in projects where finance is likely to have serious negative impact on freshwater, HSBC will not be involved, Sullivan said.

”We’d like to see this kind of cooperation increasing,” Tracey Spensley from WWF (formerly known as the World Wildlife Fund) told IPS. ”We are seeing more of a change in policies from the large multinationals; they’re speaking more of our language.”

But the new initiative does not cover every single aspect of freshwater, Spensley said. ”It is a step forward, but that does not mean a done deal where we can all now go home. Much more needs to be done.”

The HSBC guideline applies to direct lending or other forms of project finance only, including corporate lending and other financial support where the use of proceeds is known to be project-related.

It covers water resource management, water services and infrastructure, but excludes water usage and other human activities that have an impact on water.

To the extent HSBC has made a commitment, WWF will monitor implementation, Spensley said. ”Implementation will be the key.”

HSBC acknowledges that this is a complex sector where standards vary country by country. ”It is therefore not possible for HSBC to put in place a prescriptive guideline covering all aspects in detail at the local level,” the Bank said in a statement. The bank operates in 77 countries, and has about 110 million customers.

WWF is calling on other financial institutions to be inspired by the HSBC offer to be more socially and environmentally responsible.

The HSBC guideline is published as the world faces a global freshwater crisis. More than a billion people do not have access to safe and sustainable water supplies, and freshwater habitats and species are being destroyed or damaged even faster than forests or oceans.

Freshwater habitats are the most species-rich per unit area and their biodiversity is disappearing at a frightening rate; since 1900, 50 percent of the world’s wetlands have been lost, WWF says. Several studies suggest that losses may be accelerating.

UN estimates show that among the poor, 1.1 billion people cannot reach or afford safe drinking water, 2.4 billion people lack access to basic sanitation, and more than three million people die each year from water-borne diseases.