Guidelines On Environmental Management and Reporting For The Financial Services Sector

Guidelines on Environmental Management and Reporting for the Financial Services Sector
A practical toolkit
nvironmental management and reporting involves identifying, understanding, controlling and communicating environmental impacts, risks and opportunities.
Developed by the FORGE Group

These Guidelines have been prepared by the FORGE Group a consortium of some of the UKs leading financial service organisations. The consortium consists of representatives from The Abbey National Bank, Barclays, CGNU, Lloyds TSB Bank, Prudential, The Royal Bank of Scotland and Royal & Sun Alliance. Development of the Guidelines was led by CGNU and consulting support was provided by PricewaterhouseCoopers. The Guidelines also incorporate input from a wider selection of financial and non-financial sector organisations that participated in a stakeholder dialogue process. The UK Department of Trade and Industry sponsored development of the guidance with support from the Department of the Environment, Transport and the Regions. The Association of British Insurers (ABI) support the development of these Guidelines and British Bankers Association (BBA) recognise the Guidelines as an important step.
These Guidelines on Environmental Management and Reporting provide an implementation toolkit that seeks to enable wider and more consistent engagement in environmental management and reporting across the sector. Building upon the experience of many financial services organisations, the Guidelines highlight why environmental management and reporting is an important part of corporate governance. The Guidelines identify the business activities that create key environmental issues for the sector. It gives step-by-step guidance for developing management processes such that environmental risk can be avoided, governance standards met and business opportunity realised. These Guidelines are the first step and they will evolve as market and legislative demands develop to address new challenges. It may be appropriate, in time, to expand the Guidelines to include social and ethical governance and sustainability.
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Contents
Part 1: The Financial Services Sector and the Environment
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Part 3: Business Activity Guidelines
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For business managers and practitioners, these Guidelines present a route map for integrating environmental management and reporting into key business processes. Individual action points take practitioners from starting out to progress towards achieving current good practice for the sector, including identification of some suggested environmental reporting data for each business activity.
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The following business activities are discussed: Indirect (core business) impacts I General insurance and reinsurance I Risk control surveying I Fund and asset management I Property portfolio management I Capital raising, equity ownership and project finance I Commercial lending I Debt recovery I Leasing of equipment and property I Retail banking and personal lending Direct (operational) impacts I Property design and facilities management I Energy management I Waste management I Transport management I Procurement and supply chain management
Why is environmental management and reporting important for the sector and how it can impact bottom line performance and licence to operate? Success in environmental management and reporting involves knowing what needs to be managed and how this can be achieved. The latter sections of the guidance aim to address these information needs. 1.1 1.2 1.3 1.4 1.5 What is driving environmental management and reporting? What are the benefits of environmental management and reporting? What are the environmental impacts of the financial services sector? How can these environmental impacts be managed and reported? About these Guidelines
Part 2: Toolkit for developing a management and reporting system . . . . Page 8

2.1 Planning for system implementation The early decisions before developing a programme; making fundamental decisions on scope, timeframe and approach. Phasing system implementation and development Deciding where to start what to consider when determining programme development and roll-out. Implementation toolkit Guidelines for the individual/team responsible for the development of a complete management system. Presented as individual stages, with Tips for implementation, to enable the system to be built right first time in a planned and structured manner. The following stages are discussed: 1. 2. 3. 4. 5. 6. 7. 8. 9. Develop the evidence Obtain Board approval Complete an Environmental Review Draft the Group Environment Policy and Objectives Design the environmental management system (EMS) Implement and operate the EMS Audit the EMS Report to the Board Prepare Environmental Reports (internal and external)
2.2
Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 67
Appendix 1: Technical Reference sheets These offer all those involved with environmental management and reporting an understanding of some key environmental issues, legislative requirements and best practice standards. They discuss and provide references to further information on: 1. Environmental legislation and other standards 2. Environmental management and reporting standards and guidance 3. Working with small suppliers and customers which are small and medium sized enterprises 4. Climate change (also known as the "greenhouse effect" and global warming) 5. Global environmental damage: ozone layer, biodiversity, deforestation 6. Sustainable development and eco-efficiency 7. Environmental labelling and "product" take-back schemes Appendix 2: Further information sources on the internet Appendix 3: Glossary
2.3
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Part 1
The Financial Services Sector and the Environment
Why is environmental management and reporting important for the sector and how it can impact bottom line performance and licence to operate?
1.1 What is driving environmental management and reporting? 1.2 What are the benefits of environmental management and reporting? 1.3 What are the environmental impacts of the financial services sector? 1.4 How can these environmental impacts be managed and reported? 1.5 About these Guidelines
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Part 1
The Financial Services Sector and the Environment
1.1 What is driving environmental management and reporting?
The financial services sector is under increasing scrutiny both internal and external to demonstrate commitment to environmental management and reporting. External scrutiny increasingly publicised through the issue of performance indices and rankings focuses on measuring and ranking performance against competitors. In some instances these indices are produced remotely with the target company having no opportunity to contribute to or review the results before they are launched into the public domain:
The scrutiny of internal and external stakeholders is twofold: performance in terms of direct (operational) impacts, and indirect (core business) impacts resulting from the management and delivery of financial sector products and services. This scrutiny is no longer from just environmental activists, increasingly it includes:
National governments Institutional investors Shareholders Customers Suppliers Employees
All of these stakeholder groups have the ability to influence a business short-term success, operational continuity and long-term future. Whilst risk drives action, so can opportunity. For this sector, substantial achievements in environmental performance can occur as a direct result of taking market opportunities that increase income; for example, new products and new product delivery and service channels. Whilst engaging in environmental management and reporting remains voluntary for the sector due to limited directly relevant environmental legislation, it is increasingly achieving priority at the highest management levels. Key influences include: Turnbull Report guidelines for achieving internal controls to manage all business risks Company Law Review analysing Directors duties and corporate responsibilities to stakeholders Pensions Act requiring trustees to state their position on environment and social issues in investments In addition, the UK Government has stated its intention to "name and shame" those who do not make environmental performance information publicly available. Various governments are introducing environmental criteria as a mandatory component of documents of tender such that, to be eligible to participate, demonstrable environmental management processes need to be in place; and there are emerging requirements of individual Socially Responsible Investment (SRI) codes and ethical investment policies.
Dow Jones Sustainability Group Index Business in the Environment Index PIRC Survey SERM rating
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Figure 1: Summary of key drivers for environmental management and reporting
Strategy
Improve market share through new/enhanced products/services Provide support to wider business strategy, opportunity for new strategic initiatives, and improved brand positioning Enhance value to shareholders/stakeholders
Management
Improve risk management and internal controls Demonstrate tangible response to stakeholders who want to see evidence of corporate environmental commitment Respond to a real, and growing, risk to (and opportunity for) business commitment
Several within the sector have recognised the implications how negative risk must be avoided and reduction in environmental impact achieved and commenced environmental management and environmental reporting programmes. Certain global financial organisations, some with a diversity of financial services activities, are implementing global management systems and are committed to producing verified public environmental reports. All of these organisations have recognised the benefits and opportunities that environmental management and reporting enables them to achieve:
Drivers to implement environmental management and reporting

Improve operational efficiency Reduce operational costs contributing to improved cost : income ratio Respond to increasing level of external monitoring and benchmarking of performance by external organisations Provide transparency in performance to institutional investors, shareholders and other stakeholders Establish dialogue with stakeholders Achieve self-assessment of corporate governance processes, in respect of environmental risks
Improves the cost : income ratio Protects income Attracts new income streams Improves brand positioning Achieves investor confidence Communicates facts to global stakeholders
1.3 What are the environmental impacts of the financial services sector?
I
Operational performance
Reporting
Direct impacts from internal operational activities. Significant direct environmental impacts are primarily associated with internal operational activities. These include heating and lighting in buildings, transport of employees and materials, waste in all its forms, purchasing of goods and services and use of resources such as energy, paper and water. Good management of these activities will assist in achieving performance improvements, improve operational efficiency and create potential for improvement in the cost : income ratio. Indirectly, as a result of commercial activities. The environmental issues associated with company policies and practices for lending, investment, insurance and other business activities may create financial, legal, operational or reputational risk. These indirect impacts are more difficult to manage, as frequently the sector can only exert influence rather than control. However, they are becoming a priority due to (a) the potential severity and scale of impact on business performance including reputational risk and (b) the business opportunity that can be created through positive attention to the emerging concerns of institutional investors and customers.
1.2 What are the benefits of environmental management and reporting?

Demonstrating a commitment to environmental issues is increasingly becoming a necessity. It is no longer a question of whether environmental management and reporting will become essential it has. It is now a question of when, if unmanaged, it becomes critical to business continuity.
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1.4 How can these environmental impacts be managed and reported?

A management and reporting system must include:
I
These Guidelines highlight some of the main business activities that create environmental impacts and suggest environmental management and reporting plans for each (Part 3). Through this, the Guidelines start to identify where environmental factors could encourage business practice and product design to deliver enhancement in environmental performance.
Determination of the environmental impacts including prioritisation of impact areas, identifying management systems, achieving data collection, analysing performance and setting objectives and targets; Board level commitment and input to the environmental programme to ensure effective uptake and implementation of Environmental Policy throughout the organisation; Robust procedures and systems which are integrated into business management processes, rather than operated as a "virtual system" which is detached from the wider business decision making processes; Flexibility in approach which allows each area of the business to implement policy in a manner that will withstand change within the business and evolve and develop in line with market demands and expectations; Training and awareness raising, to gain understanding and buy-in from staff at all levels and in all areas of the organisation, also creating the opportunity to inform stakeholders and raise stakeholder understanding; Regular monitoring and reporting of key performance areas in order to advise the Board (and stakeholders) where policies and procedures are working well and where improvements are required; and On-going dialogue and engagement with stakeholders inside and outside the organisation to continue to raise awareness levels and achieve improved understanding, confirm that the issues of concern (actual and perceived) are being addressed and that the response reflects current knowledge and good practice.
Figure 2: Integration of environment into core business processes
Strategy
Integrate environment into business decision making to demonstrate the direct and material connections with business performance Differentiate products/services using environmental criteria Proactively manage environmental risks and opportunities to support shareholder value
Management
Include environment within existing risk management policies and processes. Establish key environmental performance indicators and targets Integrate environmental objectives into staff performance criteria and training Expand internal audit and controls to cover environmental management systems
Integrated environmental management and reporting

Incorporate environment into procurement policies and supplier reviews Incorporate environmental factors into transport and travel management Include environmental considerations in property design and facilities management programmes Include environment in investor relations programmes Include environment within community programmes Undertake stakeholder communication and encourage feedback on performance
The necessary scale and complexity of environmental management and reporting will be specific to every organisation, dependent on the nature and scope of the services provided and internal organisational structures and processes. The Guidelines identify the key stages of development of a management system and discuss individual tasks that need to be completed within each stage. They contain tips on how to achieve these efficiently and effectively (Part 2). Full use of existing management processes is encouraged.
Operational performance
Reporting
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1.5 About these Guidelines

This toolkit has been developed to help to achieve a higher level of engagement across the sector and encourage consistency in approach. When implemented, the tools contained within these Guidelines are designed to provide a foundation upon which the organisation will be able to build in order to meet related future environmental management and reporting needs. Prepared by some of the leading UK based financial services organisations, the Guidelines build upon the lessons already learned within the sector and have been designed specifically to recognise the difficulties and issues for the sector in engaging and delivering environmental governance. These issues include, in particular:
I
These Guidelines will also help to achieve wider understanding of the sectors approach to environmental management and reporting among other interested parties and stakeholder groups. These Guidelines have been deliberately restricted to address environmental management and reporting issues. It is recognised that some emerging issues, for example social and ethical governance and responding to the sustainable development debate are very pertinent to the sector. As these issues develop, management processes will need to evolve to take them into account. These Guidelines are the first step to encourage all those in the sector to engage in environmental management and reporting. Subsequent revisions of these Guidelines are anticipated which will address more advanced environmental management and reporting issues and the wider governance issues created by the global move towards achieving a more sustainable future.
The organisational structures and cultures of financial services organisations; The significance of indirect impacts over which there is limited potential to achieve direct management control; The rapid pace of change currently taking place throughout the sector, its global reach and impact; The difficulty in balancing the often long-term nature of environmental risks and opportunities with the short-term focus of the financial markets; and The culture and level of awareness of environmental issues within the sector which, to date, have not driven action.
The Guidelines have been constructed as a toolkit, to enable users to select individual tools that are of use to their own circumstances or to enable adoption of the full toolkit to provide a complete system. It contains a series of tools for those:
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With Board level responsibility, or directly answerable to the Board, for developing and overseeing Environment Policy, objectives and targets, and Group level stakeholder interaction; and With Group or business unit responsibility for day-to-day policy implementation and targets achievement and contributing to Group performance reporting.
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Part 2
Toolkit for developing a management and reporting system
2.1 Planning for system implementation
The early decisions before developing a programme; making fundamental decisions on scope, timeframe and approach.
2.2 Phasing system implementation and development

Deciding where to start what to consider when determining programme development and roll-out.
2.3 Implementation toolkit

Guidelines for the individual/team responsible for the development of a complete management system. Presented as individual stages, with Tips for implementation, to enable the system to be built right first time in a planned and structured manner. The following stages are discussed: 1. 2. 3. 4. 5. 6. 7. 8. 9. Develop the evidence Obtain Board approval Complete an Environmental Review Draft the Group Environment Policy and Objectives Design the environmental management system (EMS) Implement and operate the EMS Audit the EMS Report to the Board Prepare Environmental Reports (internal and external)
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Part 2
Toolkit for developing a Management and Reporting system
This section of the toolkit is targeted at the Group function which has the company-wide responsibility for the design and management of an environmental programme. It gives advice on getting started and obtaining Board commitment and then provides a stage-by-stage approach to implementing the programme.
The key components of a management system should be common to all systems such that the outputs are broadly comparable. These are defined in this section and, as presented, accord broadly with international guidelines on environmental management systems. The specific detailed structure of the system will be unique to each organisation taking into account, for example:
I I I I I
Existing organisational structures; Existing organisational priorities and commitments; Company culture; Product mix; and Customer base.
2.2 Phasing system implementation and development 2.1 Planning for system implementation
The objective is to identify the strategic and significant environmental impacts of the organisation and establish an overall environmental management framework with supporting management processes. This framework should not be developed in isolation. Wherever possible, at all levels through the business, the framework and the supporting processes should be integrated into existing management structures and processes. In order to establish an environmental management system it is necessary to have: 1. An understanding of the environmental impacts of the organisation; 2. Board commitment to policy and stated objectives; 3. Planning and appropriate resourcing; 4. Definition of the environmental aims of the organisation; and 5. An understanding of the concerns of key stakeholders. Developing and implementing a full environmental management and reporting system is usually achieved in a series of stages to build a management process and associated feedback and reporting cycles. These stages are defined in the toolkit presented in this section. Most organisations develop a plan for the roll-out of the management programme such that, over a defined period of time, the entire business is incorporated within the system. Determining an appropriate programme requires consideration of:
I I I
Business activities; Environmental impacts; and Environmental opportunities.
2.2.1 Business activities

In the first phase, most organisations select one business unit or region. Core components of the system are defined, developed and put in place before implementation across other units/regions. The first phase should include a part of the business which: (a) Has the most significant environmental impacts; (b) Represents a significant proportion of the business; and (c) Is supportive of the development of the management and reporting programme. See Part 3 for description of the environmental issues relating to some of the main business activities.
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2.2.2 Environmental impacts

Management systems do not have to address all environmental impacts at once it is important that priority is given to the significant impacts. The significance of impacts and the subsequent prioritisation will be determined by each organisation based on the identification and rating of the environmental impacts of the organisation/business (discussed further in Stages 1 and 3). Some prioritisation criteria are presented in Stage 3 and include:
I I I
2.3 Implementation stages

The first and most fundamental step is to collect hard, persuasive evidence and determine a corresponding business case and programme of action for presentation to the Board. The subsequent critical step is to gain Board commitment to develop an environmental management and reporting system including, in particular, an Environmental Policy and objectives. Experience has shown that achieving buy-in from the Board can be a challenging and time-consuming task, frequently taking many months and some reiterations. From there, it is critical to develop the commitment of the business units to support and participate in system development and implementation. It is vital to establish communication and feedback mechanisms to inform all, including external stakeholders, of progress and achievements. As with other significant business issues, it is common practice to have a Board Director with responsibility for the environment. In medium and large organisations, the Board Director will normally require the support of a central environment management function (one or more persons) with responsibility for the actual development and implementation of the environmental management and reporting system. A network of environmental champions or managers typically supports the central team across different business functions (see Stage 2 of the implementation programme). The nine stages of the programme are outlined in Figure 3. Remember that: (a) Existing processes may already cover some stages. It is important, when developing the system components to determine whether these can deliver the required level of management control; and (b) The environmental management processes should be integrated, wherever possible, into existing management structures and processes.
Are there applicable legal and governance requirements? Have the issues been subject to scrutiny and questions from investors? What level of risk (financial, legal or reputational) does this impact present to the business? What is the scale and severity of the associated environmental impact?
The timeframe for implementation can range from months to years, and is at the discretion of the organisation. Factors that need to be taken into account when considering the timeframe for implementation include:
I I I I I I I I
The importance (actual and perceived) of environmental issues to the organisation; Resources available (primarily people and capital); Pressures, in particular from shareholders and other external parties; Competitor developments; Specific needs (for example, terms of reference requirements for certain investments); Legal and international environmental commitments (e.g. treaties); Industry benchmarks and codes of practice; and The current status of environmental management processes.
Achieving a successful environmental management and reporting system is a goal in itself. For most organisations, it is a first step towards achieving a more comprehensive programme that, over time, could form the basis for the management of emerging governance issues, for example social and ethical issues and sustainable development. These Guidelines have been geared to provide information for those organisations starting an environmental management and reporting programme. For those organisations already progressing with programme implementation they may provide confirmation of approach and give some insight into progress made.
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Figure 3: Key stages in the development of an environmental management and reporting system
Stage 1: Develop the evidence
Stage 2: Obtain Board approval for environmental management and reporting strategy
Stage 3: Complete an environmental review to identify environmental issues and impacts (if considering external verification process needs to start at this stage)
Stage 4: Draft an Environment Policy and objectives
Stage 5: Design and develop the management system components
Stage 6: Implement and operate the management system
Stage 7: Audit the management system
Stage 8: Achieve Board level review and agree the way forward
Stage 9a: Prepare environmental reports (internal)
Stage 9b: Prepare environmental reports (external) (external verification is advised)

Key: continuous improvement feedback
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STAGE 1: DEVELOP THE EVIDENCE

TASKS
1.1 Gain familiarity with the issues pertinent to the sector and competitor activity in environmental management and reporting
TIPS FOR IMPLEMENTATION

TIP: This will involve reviewing reports and information within the sector, emerging best practice guidelines and government activities relevant to the sector, including position statements and legislation.
TIP: Call on competitors already practicing environmental management reporting, where appropriate.
1.2 Undertake a strategic review of the business to identify the key environmental impacts, risks and opportunities to the business Determine, at a strategic level, the nature and scale of the environmental impacts. Document the risks that are presented to the business and potential opportunities for enhancing business performance. The overview should: Determine performance from a review of existing data; Review scope of data collection systems and collect further essential data if required; Determine scope of existing management processes (Group and businesses); Collect/review stakeholder feedback on (a) the issues for the sector and (b) the organisations performance; and Identify the environmental aspirations and commitments of the organisation.
TIP: The overview must recognise any gaps or deficiencies in the existing management processes. TIP: There are various options for undertaking stakeholder dialogue. These include: Review of existing, publicly available survey data; Consultation (frequently via surveys) to gain information; or Direct interface through joint meetings and discussion groups. Typically, a representative sample of stakeholder groups is selected. External expertise is frequently sought to assist with this process. Once started, the dialogue will need to continue at key stages in the process. The level of detail and scope of dialogue develops as the system matures. Do not raise expectations through dialogue with external stakeholders at this stage if it is uncertain whether the Board will approve further development of environmental management and reporting. TIP: Clearly identify the criteria that will be used to determine the significance of the identified issues (see TIPS Stage 3.4).
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STAGE 1: DEVELOP THE EVIDENCE

TASKS
1.3 Evaluate the findings of the strategic review The objective is to determine the sources of impact to inform decisions concerning the business need for a management and reporting system and its required scope. Develop an outline of the business need, to present to the Board sponsor. This will form the core of the business case (Stage 2.2), and should identify: Key objectives; Risks and benefits; Estimated resource need; Outline implementation programme (stating key business units, functions and/or activities); and Indicative timescale.

TIP: This review is probably the most critical stage in the management process as, at a strategic level, it forms the reasoning and justification to the Board for taking action and defining the type of action required.
1.4 Identify and engage Board sponsor Identify a sponsor on the Board. The Environment Manager should present an outline of the business need for environmental management and reporting to the Board sponsor to engage wider board commitment. Where no Environment Manager has been identified, the Board sponsor will need to identify a suitable candidate.
TIP: In the experience of the sector, the Environment Manager needs commitment to the project, a wide understanding of the business (in particular, core business products and services) and some environmental knowledge and prior training. Consider whether this is a full or part- time role this will depend up on the size and management structure of the organisation, as well as the scope of the intended programme. TIP: Commonly in the sector, sponsors have risk or facilities management responsibilities. However with indirect impacts resulting from products and services becoming an important issue for management, it is essential that the sponsor has a sufficient level of understanding of core business products and services.
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STAGE 2: OBTAIN BOARD APPROVAL

TASKS
2.1 Develop options for an environmental management system (EMS), using the findings of the strategic review and views of the Board sponsor Options may include: Integrate as an element in key business management processes; Establish management processes in key parts of the business; or Establish a full, dedicated management system. Determine preferred option and provide justification.

TIP: In determining options consider: impacts on the business during implementation; ability to deliver short and long term goals; corporate aspirations in relation to competitor positioning and external stakeholder and regulatory pressures. In particular, the following issues should be considered: Key environmental issues requiring management attention; Key points of management control: the degree of central control/business unit autonomy; Existing environmental controls: optimum utilisation of existing systems/additional systems; Existing data collection and management systems; Policy structure: single Group policy/local Group and Business Unit policies; Environmental management structure: current and future (by business unit, region or function); Internal/external environmental reporting needs (including external verification if deemed appropriate): Group and/or Business Unit reports; Integration with other management systems: minimise cost/maximise benefit; Resource demand: personnel needs at Group and Business Unit levels during implementation and operation; Priorities: strategic and operational relating to brand and/or products; Applicable deadlines: existing commitments (e.g. reporting commitments), legal deadlines; Key values and principles; and Key stakeholder concerns and issues both for the sector as a whole and specifically for the organisation.
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TASKS
2.2 Prepare business case for environmental management and reporting strategy Consider developing draft alternative strategies for Board review.

TIP: The business case needs to reflect the particular pressures and opportunities for the sector as a whole and, in turn, for the organisation, to reflect how and why environmental performance is becoming a key business issue. Particularly, identify how managing environmental performance impacts overall business performance, is necessary to meet corporate governance requirements and is required to maintain competitive position. The business case should identify the timeframe, in terms of getting started and achieving a functioning system. TIP: Highlight the connections between business and the environment including, in particular: opportunities to improve financial performance through environmental management, competitor initiatives and progress, the level of environmental risk exposure, relevant legal developments (e.g. corporate governance requirements) and new business opportunities. TIP: Compile supporting information for inclusion in the business case including details of competitor activities, environmental risk exposure and business opportunity potential. TIP: If external environmental reporting is intended, it needs to be considered from this stage forward in order that reporting (and, if appropriate, verification) needs are addressed.
2.3 Obtain business unit support and establish network of "champions" who will form the implementation team The team should include: Business unit personnel (see Part 3, for key business activities/units); People from each geographic territory (as appropriate); For direct impacts: staff from central support functions (in particular facilities management, risk management, credit management); For indirect impacts: staff from within the core business units; Environmental specialists; and External expertise (optional).
TIP: Obtaining the support of the business units may take some time and frequently involves a series of meetings, presentations, awareness raising and training sessions. It is critical to achieve their support and involvement to enable the resulting management system to be practical and pertinent to the business and to achieve the required level of ownership throughout the organisation. TIP: External experts could be used to complement the in-house team to make sure that the organisation establishes ownership of the system and to make sure that the system fits within existing organisational structures and cultures.
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TASKS
2.4 Report to the Board and obtain commitment to preferred strategy Present business case to the Board. TIP: Once communication with staff has commenced, it must be continued regularly. Debate the options and obtain Board agreement to the selected strategy. Communicate commitment to all staff and key external interested parties (e.g. investors, customers and shareholders). TIP: Communication with external stakeholders may be appropriate. Separate, formal communication may not be necessary; however, it is often useful to state the Board position in other communications (e.g. Annual Report and Annual General Meeting (AGM)).

TIP: An internal note to all staff, signed by the Board sponsor, should be circulated to demonstrate the Boards commitment. It should identify a contact point and identify the process of development and implementation.
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STAGE 3: COMPLETE AN ENVIRONMENTAL REVIEW

TASKS
3.1 Scope of the detailed environmental review Build on the evidence gathered in Stage 1. The objective of the review is to determine the detailed nature, scale and source of impacts to provide information for the setting of policy, objectives and targets. It will also inform the process of scoping and designing the detail of the management system and preparing the programme for implementation. Define the scope of the review in terms of: Environmental impacts that will be covered; and Coverage in terms of business units/regions/functions to be included. Determine, in detail, those impacts/activities that will be the focus of the environmental management programme.

TIP: Key tasks within the review include: Understand the extent and nature of current environmental management controls and their success, in particular the comprehensiveness and structure of existing data collection systems; Identify the environmental impacts over which the organisation will exert management influence (indirect or "core business" impacts), or control (direct or operational impacts); Review the state of compliance with existing Environmental Policy and other environmental commitments (e.g. United Nations Environment Programme (UNEP) statements); and
TIP: The findings of the environmental review are the foundation for the management programme. The review needs to provide sufficient and accurate information such that the resulting programme is appropriate to the impacts while remaining achievable. If the review misses key risks (either actual or perceived), the future Policy, objectives and targets may be deficient and the system potentially subject to criticism. TIP: Document reasons for excluding business units, regions and/or certain functions from the review if these have an identified environmental impact that the organisation can influence or control. Wherever possible, justify exclusions using business, as well as environmental, reasoning.
3.2 Prepare for the environmental review Define the review methodology, identify mechanisms to obtain background information, involve key stakeholders and develop a work and interview plan. Provide instruction to the review team. Consider preparation of an environmental review questionnaire.
TIP: Consider using external consultants or internal specialists to support the team. Internal specialists will include personnel from central support functions and core business personnel involved with product design, development and delivery. TIP: The review approach is most commonly influenced by the availability of personnel and the balance between central control and business unit autonomy. The review process can range from travel of a central team to locations to conduct reviews, through travel by appropriate in-country business unit or regional representatives, to local completion assisted by local internal or external experts as required. If reporting is intended, it can be useful to involve the reporting and verification teams at this time.
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TASKS TIPS FOR IMPLEMENTATION
TIP: Identifying pertinent legal requirements and other external requirements is an important element of the review process. There are various ways in which this can be achieved, ranging from preparation of a specific register of environmental regulations and standards, through to use of published sources of information. It should be recognised that any publicly available information is not likely to be tailored to reflect the legislation relevant to the sector. (See Appendix 1, Reference Sheet 1 for further information on environmental legislation). TIP: It can be helpful to develop the compliance report format (see TIP above) such that requirements are identified in a list/register format. This facilitates updating and revision of the requirements list in subsequent years.
3.3 Gather environmental review information Undertake interviews and if appropriate, complete review questionnaires (internal). Consider undertaking dialogue with external stakeholders.
TIP: Data collected to establish the performance benchmark would include, for example: public commitments (e.g. Policy and statements presented in Annual Reports); competitors environmental reports; external standards/guidance (e.g. UNEP publications, environmental reporting guidance); relevant legal documents; internal environmental performance data (e.g. energy use information); reports/articles prepared by environmental pressure groups relevant to financial organisations. TIP: Achieving input from stakeholder dialogue into this process can add credibility to the output.
Collate relevant information from other internal sources and external publications (see Part 3 for further discussion of relevant issues) which will help to form a "performance benchmark" against which review findings can be compared.
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TASKS
3.4 Evaluate environmental review data Based on the analysis, prioritise the relative significance of each impact in terms of the financial, legal or reputational risk or opportunity for the organisation. (See Part 3 for a discussion of the risks/opportunities by business activity). It is critical that this process is transparent, robust and able to be replicated. Consider completing a cost : savings assessment, in particular, for areas of direct, operational impact. Compare the findings of the review with the overview information provided in the business case (see Stages 1 and 2). Identify if there are particular discrepancies or omissions from either review and resolve.

TIP: Evaluation is typically achieved using matrices rating impact against significance assessment criteria. Frequently, impacts are graded as high, medium or low significance. Significance criteria can include the following: Legal requirements; Internal policy requirements; Organisational commitments (e.g UNEP statements); Contribution/scale of the source activity within the total business activity (and hence relative scale of the impact); Degree of controls already in place or (in the case of indirect impacts) ability to influence and effect change; Potential to impact business performance; Severity/irreversibility of resulting damage; Level of stakeholder concern (internal and external); Position relative to or intentions to adopt/meet good practice; and Potential environmental opportunities for improvement.
TIP: To achieve cost : savings assessment, existing data on expenditure will need to be collated and assessed. This exercise is able to form the basis of future resource management and consumption/cost reduction plans. TIP: The analysis needs to identify areas where management changes and improvements need to be made, consider how issues can be addressed most effectively, and, in particular, identify at which level in the organisation they need to be addressed to achieve improvement. For example: Procedural or strategic issues should be addressed by taking action at Group level; Issues associated with a particular product/service line may need to be addressed at the business unit level; and Specific operational impacts may need to be addressed at a location or national level, or by a function group (e.g. facilities management).
3.5 Report key findings of the review Communicate findings to the Board as well as the business units/functions involved with completing the review, agree those findings that will be taken forward and, broadly, the time frame for programme implementation. (See Stages 1 & 2).
TIP: Take into account the overall timescales developed and for those issues which will be addressed in later stages of implementation, particularly the indirect impacts, provide justification for the decision. In many cases the justification will include a "business" reason, for example: commercial sensitivity, commercial confidentiality, business impact and practice. (See Stage 6.2).
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STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

TASKS
4.1 Define the scope of the Environmental Policy and Objectives

TIP: Consider when determining the scope of the Group Policy: The strategy agreed with the Board (Stage 2); The findings of the environmental review; Known short-term business changes (which affect the identified environmental impacts); and Other relevant Group and business unit policy commitments. The Policy and objective commitments need to be realistic considering what can be achieved within the Policy term (typically 3-5 years) yet challenging. With each Policy revision, the commitments should advance the organisation towards achievement of better and, ultimately, best practice ("continual improvement"). It can be useful to review the environmental policies of other organisations to understand their level of commitment and scope. TIP: It is essential that the Policy and objectives receive buy-in from all affected Business Units as well as the Board. The mechanisms to achieve this need to be identified and implemented at an early stage in the Policy development process. TIP: The Policy should include a statement on the organisations approach to internal and public reporting and disclosure of environmental information. This could include for example: separate environmental reporting, commentary in the Annual Report and Accounts and promotion at the companys AGM.
4.2 Plan for writing the Environmental Policy and Objectives Obtain copies of existing, relevant company policies and programmes which will interact with the Environmental Policy, including: Credit/underwriting/investment risk policies (portfolio and site specific) etc; Socially responsible investment policies;
TIP: Objectives comprise high-level aims that provide the means to deliver and manage policy commitments. They can be presented as an integral part of the Policy document or, alternatively, they can be presented separately. For many centrally controlled management systems with local implementation, it can be preferable to provide the objectives in a separate document with more explanation of intent to guide the development of local targets which will deliver achievement of the Objectives (see Stage 5.3). TIP: Existing environmental management standards (see Appendix 1, Reference Sheet 2) set some requirements for Policy content. It is good practice to adopt these and adoption would be necessary if certification under these standards is intended.
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STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

TASKS
Procurement policies; Property and facilities management policies; Health and safety policies; Corporate governance policies; and Human resource programmes. Achieve buy-in and support of the business units that will be impacted. Set deadlines for Policy and objective drafting and define Board review dates.

TIP: Some organisations seek stakeholder input to their Policy and objectives development and review stages (see Stage 1.2).
4.3 Draft the Environment Policy and Objectives Policy commitments are supported by objectives, which are supported in turn by targets (see Stage 5.3). In addition, consider the development of Key Performance Indicators (KPIs).
TIP: Within the Policy include: description of the coverage of the Policy in relation to the business activities; commitment to environmental compliance and continual improvement; and achievable aims that will remain relevant for a period of 3-5 years. TIP: Typically organisations set about 10-15 objectives, most of which are qualitative, but which must be time limited, auditable and able to be supported and delivered by realistic targets. Most objectives are developed to be applicable for a 3-5 year period such that they are reviewed and revised in parallel with the Environmental Policy (see Stage 8). Individual tasks required to achieve the objectives will be specified through targets which are typically reviewed and updated annually (see Stage 5.3). TIP: KPIs represent indicators of performance that can be used in the long term to track and report business performance and demonstrate the organisations core values. To be successful these must be embedded into core business principles and core management processes. TIP: Frequently, first or early Policies focus on reducing impact including, in particular, direct impacts. However, Policies of organisations with more established management systems are increasingly looking to manage indirect, core business impacts and further reduce direct impact. For example: eco-innovation (finding new ways to do business with less impact), and doing more for less (good business practice) and developing new business opportunities.
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STAGE 4: DRAFT THE GROUP ENVIRONMENTAL POLICY AND OBJECTIVES

TASKS
4.4 Obtain Board commitment and Policy sign off See Stage 8 for explanation of the process of reviewing and updating the Group Policy and Objectives.

TIP: It is the responsibility of the Board to review overall Group-wide progress with Policy implementation. The Boards review is typically achieved annually through the Management Review of the environmental management and reporting programme (see Stage 8). TIP: The Environment Manager will be responsible for checking progress with Policy implementation and progress towards achievement of objectives on a more frequent basis (e.g. quarterly). Day-to-day responsibility for implementation will be at a local level and assessed by determining performance against targets which underpin the Policy (see Stage 5.3).
4.5 Distribute the Environmental Policy Provide a copy of the Environment Policy and objectives to all business units/regions/functions. Consider the value of wider circulation of the agreed Environment Policy i.e. full public availability, selected stakeholders.
TIP: Public distribution of an Environment Policy is a requirement of the existing environmental management standards (see Part 3 and Reference Sheet 5). TIP: When circulating the Policy internally, it is advisable to enclose a memorandum from the Board stating that the Policy should be made available to all staff and confirming that it provides the overall statement of the Groups environmental commitment that the management and reporting programme will need to deliver.
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STAGE 5: DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TASKS
5.1 Define the EMS coverage and structure Build on the pre-work in Stage 3. (See page 15). Understand the existing organisational structure and align the environmental management and reporting structure with it. Wherever possible, make use of existing management processes and tailor them to meet the necessary environmental requirements. The scope and structure of the EMS should reflect the scope of the Policy in respect of the activities and products included (see Stage 3.1 and Stage 4.1). The structure should therefore also reflect the agreed strategy and the findings of the environmental review, be practical for achievement and appropriate for the organisation.

TIP: Many financial services organisations have established central environmental management groups with a designated Environment Manager. In addition to the central team, most organisations have identified environmental champions/managers across the business to provide an implementation network with defined accountability. TIP: When determining the EMS structure consider: Degree of central control vs. a management network; Roles and responsibilities of the environmental management team/network; Staffing arrangements internal staff input balanced with external support in development and implementation; Degree of centralisation of target setting and procedures vs. local autonomy; Regional, business unit and function areas and lines of environmental accountability; and Means of communication, audit and management review.
TIP: If external verification of the report is intended (see Stages 2 and 9) it is advantageous to involve the verification team during this stage in particular to ensure that the management system delivers appropriate and reliable data for reporting purposes.
5.2 Plan implementation of the EMS Identify internal team(s) responsible for detailed design and implementation of the EMS and allocate responsibilities. Identify the timeframe for implementation, identify sub-stages and key milestone dates (see also Stage 6.1). Define key internal and external communication needs and channels. Establish processes to monitor the success of implementation and achievements of the EMS.
TIP: It is important to involve the business unit managers/regional managers and/or function managers whose staff will be involved with EMS implementation. TIP: For staff with key involvement, appropriate training should be provided. Ideally, include their environmental role in their job description and develop appropriate individual performance objectives. All staff should participate in environmental awareness raising initiatives and/or training. TIP: The overall timeframe for implementation will have been considered during development of the strategy (Stage 1.3 and Stage 2.2). The detailed timeframe needs to be realistic, taking into account other business activities that need resource and priorities of the various business units/regions/functions. In addition, the pace and direction of external influences (e.g. statutory requirements, stakeholder campaigns) should also be recognised.
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TASKS
5.3 Develop the EMS The EMS will evolve to achieve increased coverage and system component definition over time and take into account business changes including structure, focus and activities. Define the environmental management hierarchy. Develop the process for setting environmental targets and corresponding action plans. These should include named responsible individuals, deadlines, reporting and audit data requirements. Prepare written operational procedures and integrate these into existing management control procedures where possible. Establish Group level performance monitoring and feedback systems including management review processes. Communicate with internal and external parties using existing mechanisms where possible. Establish Group-wide information systems and reporting structures for key environmental data for internal and external reporting (if external reporting is planned see Stages 2 and 9). ["Key" environmental data comprises that data which must be collected either to demonstrate meeting of targets, objectives and Policy and/or is necessary to provide data for reporting.] TIP: It is important that the environmental management structure is clear, logical and appropriate for the business. The structure should reflect, and make use of, existing group management systems and structures. In particular data management systems should be embedded into, or aligned with, existing management and financial (accounting) systems. The structure, both in terms of management hierarchy and documentation structure (e.g. procedures and reporting) must be defined but must also be sufficiently robust and flexible to accommodate change. This may include business structure changes (e.g. formation of joint ventures), product mix changes (product and thus impact balance), and the altering roles of, and pressures on, financial services organisations. TIP: In many cases a combination of central and local operational procedures are developed (e.g. central procedures for assessing the environmental risks of lending and local procedures for business travel). For some environmental issues it can be appropriate to have central "guidance-type" procedures which give an overview of what needs to be achieved and how, such that the corresponding local procedures are comparable (e.g. energy management). With increasing stakeholder attention on the global performance of financial service organisations it may be necessary to consider development of central guidance-type procedures covering areas of indirect activity. It is possible for these to leave scope for local amendment (to make the requirements more stringent or to reflect local priorities and practices) where necessary/practical. TIP: Targets are the detailed, shorter-term goals that will deliver the Group objectives and Policy commitments. Wherever practical, targets should be quantitative. They must be time limited, measurable and auditable. Most targets have a time expiry of 12-24 months. It may not be possible to set meaningful, quantified targets until 1 or 2 years after system development while data collection systems are put in place. However, qualitative targets, possibly including system development targets, should be set in the first/early years, as soon as circumstances permit.

See Business Activity Guidelines (Part 3) and Reference Sheets (Appendix 1) for discussion of individual environmental issues, suggested action plan components and reporting data which can be used to guide the development of local action plans and targets TIP: Refer to European and international guidelines on environmental management systems (see Appendix 1, Reference Sheet 2).
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TASKS TIPS FOR IMPLEMENTATION
TIP: Quantified targets and reporting data (that reports performance against target) can be reported as "absolute" data, or they can be "normalised" against a standard unit of business performance with which that performance aspect has a proportional relationship (for example: by revenue, number of customer accounts, number of employees etc). Normalisation, if not presented appropriately, can impact the meaningfullness, transparency and accuracy of the reported data. To be successful, decisions on normalisation need to be made at the individual organisation level such that they take into account business management and reporting structures.
5.4 Issue internal release to demonstrate progress and commitment to the environmental programme
TIP: Issue a Board communication to all staff advising of the development of the EMS and imminent implementation, emphasising the purpose of the EMS and its importance to the business.
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STAGE 6: IMPLEMENT AND OPERATE THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TASKS
6.1 Plan for implementation in particular identify the programme of implementation through the business

TIP: The plan should including the following: milestones and timeline; training schedule; definition of critical path factors; deliverables and benefits; and allocated responsibilities for reporting information. TIP: Define timetable for roll-out in consultation with the relevant parts of the business.
6.2 Implement first phase of the programme
TIP: It is common for implementation to be phased. The early phases of implementation will typically include Group management activities as well as selected business units/regions and functions. First phase selection typically comprises those business units/regions with a significant environmental impact and/or those high impact activities that apply across the business (e.g. transport policy). The ordering of issues for attention should be based on the priorities of the organisation identified during the course of the environmental review. (See Stage 3).
6.3 Formalise Business Unit management commitment Build upon planning work (see Stage 5) and gain formal business unit management commitment to the EMS including: Providing specific training/guidance to improve understanding among all staff; Definition of individual performance objectives relating to environmental management and reporting (where appropriate); Inclusion of environmental roles in job descriptions; Allocation of management time; Integration of environmental procedures into other management processes/systems; and Allocation of staff communications. time to environmental training and
TIP: Encourage business unit managers to give their commitment to support the entire EMS implementation and operation from the outset. Initially local champions will need to make additional time commitment, this is typically recouped as the management system matures. TIP: Training options include central training of all staff; business unit/regional training for a limited number of staff who then conduct internal training; or use of external trainers. Many organisations have found workshop style training to be effective. In some instances environmental training can be successfully integrated into other, existing training programmes (e.g. health and safety and internal control audit programmes).
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STAGE 6: IMPLEMENT AND OPERATE THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TASKS
6.4 Establish communication channels at Business Unit and Group level The following structure offers an example: Strategic Team (Group wide with business unit input) to discuss strategic evolution of the EMS, competitor and statutory developments; Business Unit Groups (e.g. investments, insurance) to consider relevant stakeholder developments, methods for including environmental considerations; and Function Groups (e.g. property/facilities management, purchasing) to consider relevant statutory/good practice developments, technological options, to provide specialist assistance. Ideally use existing communication channels for wider cascade/staff involvement.

TIP: Wherever possible, use existing communication channels for formal management communications (e.g. business unit meetings, management performance reports). Ensuring that the EMS management structure reflects existing management structures and is appropriately integrated into wider business management processes (see Stage 5) will facilitate successful communication with limited additional effort.
6.5 Continue EMS roll-out across the business Implement the EMS according to the phasing plan developed in Stage 6.1. Implement ongoing checking mechanisms to monitor the status of programme implementation and achievements. Also identify the action that will be taken in the event of non-compliance with deadlines or conflict.
TIP: Encourage networking for informal communication. TIP: The strategic team needs to plan ahead to extend the Policy and EMS application into those business units/regions and/or functions excluded from the first stage of implementation. TIP: Once commenced, the EMS will be subject to evolution and development. The Strategic Team will need to monitor developments within the organisation which have environmental significance and developments outside of the organisation. This management system will need to be maintained. Business Unit Groups and Function Groups will identify specific changes/developments that need to be taken into account. These updates will be made at defined intervals (e.g. annually in the update of local action plans and targets and group wide through the management review).
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STAGE 7: AUDIT THE EMS

TASKS
7.1 Define internal EMS audit programme Define the audit objectives, which EMS components will be audited and how the audit will be achieved. The audit needs to include: Review of key system documentation; Interviews with appropriate staff; Audit check of system implementation and performance; and Review of progress of any previous audit recommendations. Decide on audit team(s) members whoever is conducting the audit must be independent of the EMS implementation teams.

TIP: The audit needs to interrogate the EMS to determine that the processes put in place achieve the required level of management control over the identified significant impacts (see Stage 3.4). The audit must confirm the objectivity of the decision-making processes that determined the scope of the management system. The audit structure will be largely dependent upon the design of the management system. TIP: The audits can, and should, be integrated with existing internal control processes and where possible use existing functions, such as internal audit or health and safety, to complete much of the work. The frequency, timing and means of completing the EMS audits will be strongly influenced by existing internal control arrangements. If internal audit resource is to be used, it is necessary that they are provided with some environmental training or work with external specialists. TIP: The audits can be conducted on a rolling programme. For example, they can cover different business units/regions/functions in each year or can be structured to audit Group wide implementation of the different EMS components. Typically, audits are conducted of each part of the system either once per annum or at regular intervals (e.g. every 2 or 3 years).
7.2 Prepare for the audit programme Provide appropriate auditor training and develop the audit protocol, report format and pre-audit checklist. Develop standard evaluation guidance for use by the auditors to facilitate consistent and comparable interpretation of audit findings. This should identify areas of over and under performance against EMS "system requirements" and against targets.
TIP: There are some approved national auditor training courses available in many countries. The approved courses satisfy the existing environmental management standards. It is not mandatory to have auditors complete this training unless certification under one of the standards is sought. However, attendance usually proves beneficial for auditors with no environmental experience. TIP: The audit programme should cover the entire business. It is important that in addition to the business units, all Group functions are included.
7.3 Conduct audits Complete interviews and document review to confirm the level of compliance with the EMS.
TIP: Include time to receive questions from the business units and request their suggestions on EMS improvement and development. TIP: Where possible, discuss the implications of any over or under performance and potential recommendations for improvement during the interviews themselves. This will help in recommendations being practical and supported by management.
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STAGE 7: AUDIT THE EMS

TASKS
7.4 Evaluate and report the audit findings Review all audit findings and collate into a single Group report. Consider the implications of the detailed findings and develop related recommendations, where appropriate.

TIP: The management structure will determine at which levels the audit findings will be evaluated and how this information will be reported and incorporated into the ongoing development of the EMS. In more autonomous organisations, a business unit/regional evaluation may be undertaken instead of the Group level one. TIP: During evaluation, identify the "causes" of under-performance and over-performance. It is this knowledge that gives useful insight for the ongoing development of the EMS.
7.5 Agree recommendations with implementation teams
Business Unit management and
TIP: Ensure that feedback from the audit programme is returned to the business units/regions/functions involved to enable continual learning and improvement. A summary of the findings and the resulting recommendations should be included in the management review (see Stage 8). TIP: Justifications may include:
Present and discuss the recommendations, with justification. Obtain the appropriate management agreement to the recommendations that will be implemented.
Achieving the EMS "system requirements" i.e. to maintain a pragmatic, effective management system; Maintaining overall performance against Policy aims, objectives and local targets; and Controlling business impact ability to realise and record tangible and intangible benefits and minimise business risk.
7.6 Manage the implementation of recommendations Issue formal communication to advise business units/regions/functions of the immediate actions to be implemented with reasoning for recommendations given. Implement recommendations that are the responsibility of the Group, typically those that require amendment to the management system or Group level action. Implement process to check progress within Business Units.
TIP: The audit recommendations will provide the core information for the annual development of new targets (see Stage 5) and for the onward development and improvement of the EMS in those parts of the organisation where it is still to be implemented.
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STAGE 8: REPORT TO THE BOARD

TASKS
8.1 Define the objectives of the Board Level Review The objectives of the Board Level Review are to assess the success of the EMS with respect to: Achievement of targets, objectives and Policy commitments (and KPIs if developed, see Stage 4.3); Control of significant business impacts; Adherence to time-line and planned resource commitments; and Attention to priority issues and agreement on the way forward. The review also needs to achieve agreement on addressing problems and making changes to the EMS. Within large organisations, the Board review will build upon the findings of individual senior management reviews within the individual Business Units/regions/functions.

TIP: The management review is the process that identifies and instigates change to the entire EMS framework. It should be conducted as a high level overview but refer to specific operational examples. The review is the forum within which any significant changes to the scope, structure and content of EMS will be agreed to maintain "fitness for purpose". It is therefore a critical stage in the continuing evolution and roll-out of the EMS. The frequency of management reviews varies, although it is advisable that a Board level EMS review is undertaken at least once per annum. TIP: Additional review objectives may include: Suitability to respond to and address identified needs and impacts of the organisation adequately so as to achieve management control; Effectiveness as a business management tool in realising opportunity and minimising risk; and Comprehensiveness of implementation including adherence to the implementation programme and resource plans.
8.2 Prepare evidence for Board Level Review Define how the review will be conducted it needs to culminate in a meeting of the Group personnel with environmental responsibility and Board members. Planning tasks should include: Confirmation of availability of required participants; Communication of review objectives; Scheduling such that the review can use audit feedback; and Preparation of a pre-review information pack for participants, identifying achievements and benefits, problems and key concerns. Get local management sign-off on findings in advance of presenting to the Board.
TIP: Where possible, add the evidence gathering process to an existing management review activity. However, this should not reflect a lower priority of the environmental system review, merely effective use of management time.
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STAGE 8: REPORT TO THE BOARD

TASKS
8.3 Conduct the Board Level Review

TIP: The Review needs to consider the success of the entire EMS. Therefore, it needs to remain as a high-level, strategic review and should not include discussion of EMS detail unless the Environment Manager has concerns about specific components which cannot be resolved without Board support/involvement. TIP: Issues for discussion may include: progress made, state of compliance with Group Policy, problems encountered (including implications and possible resolutions), new issues to be addressed, onward programme of implementation and preparedness for issue of public reporting (and verification if appropriate).
8.4 Agree recommendations and actions Document findings and recommended actions. Obtain management commitment to agreed actions. Get Board sign-off.
TIP: The actions that may result from the Board Level Review will be primarily those that require Group level attention (e.g. resourcing issues).
8.5 Communicate findings and outputs Allocate actions to responsible individuals and determine how these will be implemented through the Group. Present a summary of management review findings for internal circulation and incorporate into the environmental report (if planned) as appropriate. Communicate directly to those personnel involved in making system changes.
TIP: If an Environmental Report is issued (see Stages 3 and 9) this provides a useful mechanism to report publicly on the environmental management progress that has been made and the intentions for future development of the EMS. TIP: Also consider issue of a summary of achievements internally to all staff to increase ownership and understanding.
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STAGE 9: PREPARE ENVIRONMENTAL REPORT (Internal and external)

TASKS
9.1 Preparation Confirm whether the Report will be for internal use or for both internal and external use. Confirm whether the Report will form part of the Annual Report or will be a stand-alone document. Determine target audiences for the Report (e.g. employees, customers, investors, non-governmental organisations etc.). Select reporting media (e.g. hard copy, Internet). Define schedule for reporting process and production. Review existing objectives, targets, KPIs and Group systems for collating and assimilating environmental data, to confirm which will be included in the Report. Identify whether external verification is required, either of the whole report or of selected data/sections. This may have been determined already (see Stage 2). Determine the scope and purpose of external verification and prepare engagement letter. Select verification team (this could include using the Internal Audit function and/or external verifiers). Select a company to deal with drafting, graphic design and production as required. TIP: Involve the independent verifiers from this stage to help ensure that the report is structured to ensure that the data is presented in a form where it can be usefully verified. The verifier should also be able to assist in determining the appropriate level of verification (see Stage 9.2 for further discussion), according to the verification statement to be included in the report (if any). TIP: Consider involvement by external companies in drafting of the report, compilation of artwork and final production. Also consider a level of involvement by the external verifiers to confirm the required and possible level of verification.

TIP: Preparation for reporting, including the establishment of the reporting processes, should start at the earliest opportunity as it provides a fundamental check on the suitability and scope of the management programme to manage the identified significant impacts. TIP: In some cases, organisations will prepare an internal report in the first year while the reporting processes are still being developed. Other organisations have chosen to issue a summary of activity in the first year with full public reporting following in the second year. TIP: For target audiences determine their key concerns and level of understanding of the business. Sufficient information may have been gained through the stakeholder dialogue which has been completed during previous stages.
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TASKS
9.2 Scoping for report content, style and structure Define the "strategic" content and style of the report in terms of overall key messages. Define the scope of the Environmental Report in terms of: Environmental performance (either by environmental issue or business activity); Balance of the Report between qualitative Policy and system information and quantitative performance data; Geographic territories/business unit or function or issue (impact) focus (e.g. waste production, energy use); Policy and EMS review; and The means of presenting absolute/normalised). performance information (e.g.

See Part 3 for some suggested reporting data which may be used as guidance and refer also to Appendix 1, Reference Sheet 2, Environmental management and reporting standards and guidance. TIP: External environmental reporting is still evolving and remains voluntary in the UK. Several financial services organisations now issuing environmental reports started by publishing policies and action and plans for developing their EMS before preparing a full environmental report. TIP: Develop a specification for the external verification exercise using pre-agreed selection criteria for reasons of objectivity and credibility. Recognise through the specification the roles and responsibilities of the internal audit function. TIP: For the strategic content consider the emerging guidance on environmental reporting (e.g. Global Reporting Initiative) and environmental reporting award schemes (e.g. ACCA) and DETR reporting guidelines (e.g. greenhouse gases, waste and water). TIP: Understand from the verifiers when the individual tasks required to complete the verification will be undertaken and what is involved with achieving each with respect to data and personnel being available. To maximise value from the verification process it is beneficial to have the verification conducted as an integral part of the report development process.
Confirm the detailed scope of the verification.
9.3 Data management and reporting Establish standard data reporting templates for Group wide application. Ensure that the EMS audits identify the reliability and scope of the environmental monitoring and data collection systems in place (see Stage 7).
TIP: Reporting templates should cover qualitative and quantitative information: Minimum information requirements; Supporting evidence requirements (audit trail); and Local (Business unit/senior management) accountability and sign off.
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TASKS
For derived data, identify calculation formulae at Group level and disseminate to business units/regions/functions as appropriate. Define the process for achieving normalisation of data where appropriate. Communicate to the appropriate business units/regions/functions. Establish internal control processes to check quality control through the data management process.

TIP: As identified (see Stage 5.3), KPIs, objectives and targets can be "normalised" against a standard unit of business performance. Within the sector, different normalisation criteria have been adopted and, at this time, it is not possible to suggest "standard" normalisation factors for sector wide adoption some suggestions have been given in the individual Business Activity guidelines (Part 3). Appropriate normalisation criteria will depend upon: Customer base and product mix; Current organisational data management and reporting systems; and Existing normalisation factors (for non-environmental data). This is an area of ongoing debate for the sector to attempt to develop improved consistency and comparability in reporting.
9.4 Drafting and review Follow standard report development processes e.g.: Prepare skeleton content list; Identify authors and reviewers for each section of the report; Write and review the report; and Provide the final draft report to the external verification team for final review and for preparation of the signed verification statement, if applicable.
TIP: Include details of targets and objectives within the Report with identification of progress against them. The outcome of this comparison should help inform the EMS review (Stage 8) and provide demonstration of continuous improvement.
9.5 Publish Make the report publicly available, if applicable.
TIP: If a separate Environmental Report is prepared, consider the preparation of an Executive Statement which could be stand alone and also included within the Annual Report. TIP: If appropriate, consider and select options for achieving wider use of the Report e.g. at AGMs, promotional events, news releases and participation in environmental reporting award schemes.
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TASKS
9.6 Collect and act on feedback

TIP: Positively encourage feedback this is the primary means to rate the success of the report and is important in completing an assessment of the full cost/benefit of the reporting process. Include contact details. Consider including pull-out post cards addressed to the company on which comments can be written.
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Part 3
Business Activity Guidelines
For business managers and practitioners, these Guidelines present a route map for integrating environmental management and reporting into key business processes. Individual action points take practitioners from starting out to progress towards achieving current good practice for the sector, including identification of some possible environmental reporting data for each business activity. The following business activities are discussed:
Indirect (core business) impacts

I I I I I I I I I General insurance and reinsurance Risk control surveying Fund and asset management Property portfolio management Capital raising, equity ownership and project finance Commercial lending Debt recovery Leasing of equipment and property Retail banking and personal lending
Direct (operational) impacts

I I I I I Property design and facilities management Energy management Waste management Transport management Procurement and supply chain management
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Part 3
Business Activity Guidelines
To achieve the operational and commercial benefits from environmental management outlined in Part 1, it is essential to integrate appropriate consideration of environmental management within daily business activities at all levels of the organisation. To encourage management buyin and to support effective implementation, the environmental management procedures should be designed to fit into, and with, existing management processes. Business risks and opportunities related to environmental issues arise as a direct consequence of how a firm does business. Achievement in respect of environmental management and reporting and performance has a direct effect on the cost : income ratio. It is important therefore, that staff in all areas of the business from product design and through support and management functions are advised of the relevance of environmental impacts and are encouraged to apply the environmental guidelines to their own activities. This section of the document provides guidance on the environmental issues that affect specific commercial and operational processes within financial sector organisations. It contributes to the completion of the Environmental Review described in Part 2, Stages 1 and 3. Guidelines have been included for those processes considered to have the most significant impact (direct or indirect) on the environment. These are listed in Table 1 below. Table 1: Areas covered by Business Activity Guidelines
COMMERCIAL ACTIVITIES WITH INDIRECT IMPACT (Core business impacts) General Insurance and Reinsurance Risk Control Surveying Fund and Asset Management Property Portfolio Management Capital Raising, Equity Ownership and Project Finance Commercial Lending Debt Recovery Leasing of Equipment and Property Retail Banking and Personal Lending OPERATIONAL ACTIVITIES WITH DIRECT IMPACT (Operational impacts) Property Design and Facilities Management Energy Management Waste Management Transport Management Procurement and Supply Chain Management
As explained in Part 2, Stage 3, it is essential that organisations, undertake a thorough environmental review to identify their significant impacts and the source activities which create these impacts. The guidance given in this section will assist with this process. Once impacts have been identified they are prioritised (Part 2, Stage 3.4) according to factors such as:
I
Legal requirements; Internal Policy Requirements; Organisational commitments (e.g. UNEP); Materiality of the source activity to the business; Degree of controls already in place or (in the case of indirect impacts) ability to influence and effect change; Potential to impact business performance; Severity/irreversibility of resulting damage; Level of stakeholder concern; Position/intentions to adopt/meet good practice; and Potential opportunities for improvement.
Each set of Business Activity Guidelines presents:

G
A brief explanation of the specific business activities involved; The associated risks and opportunities. Frequently opportunities may be interconnected (e.g. reputational opportunities can have positive impact on financial performance although difficult to quantify); Advice on a framework of management processes to manage the environmental risks and opportunities associated with each activity; and Ideas on suggested reporting data for each business activity.
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It is not necessary to complete the tasks in any specific order, nor is it necessary to complete them all immediately. However, by achieving each recommendation, the organisation will progress towards environmental management and reporting good practice for the sector. It constitutes the first step of a process towards structured management of the environmental risks and considerations that financial sector organisations face. The Business Activity Guidelines reflect the current situation in relation to statutory environmental controls, the scientific understanding of global environmental issues and current shareholder and market expectations of financial services organisations. As these external factors change, the nature and potential severity of environment-related impacts will also change. Management processes will, therefore, need to continue to evolve to meet changing business needs. In the same way, additional business activities may be identified as being relevant to environmental performance. Accordingly, management processes will need to be developed for these areas.
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GENERAL INSURANCE AND REINSURANCE

Scope of application
Provides guidelines for those involved with reviewing insurance proposals, measuring risk, setting premiums, preparing policy documentation, managing policies and responding to claims. Environmental issues can be relevant to several different insurance classes including:
G G G G G
Property: Vehicle; Marine; Third party liability and product liability; and Others: business/service interruption and professional indemnity cover, environmental impairment liability (ELI) insurance.
Risk control surveying, as a specific component of the insurance process, is covered under separate guidance due to the specific environmental management processes which can be integrated into this activity to support the policy and premium setting undertaken by other parts of the organisation.
RISKS Financial: I Unanticipated financial impact leading to unplanned costs. I Fall in share price as a result of reduced business performance or the anticipation of reduced performance as a result of environment-related risks. I Reduced investor confidence where there is seen to be insufficient environmental risk management in place. Reputational: I Failing to demonstrate response to emerging market needs.
OPPORTUNITIES Financial: I Increased market demand for insurance for emerging environmental risks. I Improved business planning and risk provision. I Improved investor confidence that may contribute to increased share value. Reputational: I Enhanced reputation among wider stakeholders through positive environmental positioning. I Improved business partner relations through delivering value-added services. I Competitive advantage.
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GENERAL INSURANCE AND REINSURANCE

Environmental management action plan guidelines:
Possible reporting data: 1. 2. 3. 4. Define an Environmental sub-policy/procedures identifying the key principles and aims of the organisation. Consider providing products that deliver environmental insurance needs and establishing internal controls to manage environmental related business risks. Categorise between standard, non-standard and unacceptable risks for which cover will not be provided. Determine underwriting policy. Review business performance in respect of the impact of environment-related issues and the changing legal environment in relation to responsibility for environmental damage. Also, review the existing portfolio to identify key areas of risk exposure. This should be completed on a regular basis to determine performance trends and identify key factors influencing performance. Using the review findings and policy aims, develop an environmental risk classification matrix high, medium, and low for standard application. This should take into account key causes of environment-related claims, the likelihood, the potential severity and the frequency of claims in relation to the life of the policy. Develop guidance identifying the key data for each risk category in terms of premium conditions and pricing specific policy inclusions as well as policy exclusions and limitations. Develop mechanisms and tools that enable identification and assessment of environment-related risks that may be associated with a particular customer or insurance product. Integrate into existing risk assessment processes. Establish common procedures to complete more detailed assessment of medium and high-risk cases. This may include more detailed environmental review by the risk control surveyor and/or commissioning of internal/external environmental experts to complete an independent environmental risk assessment. Review standard policy clauses to check that terminology is appropriate with regard to the level of associated environment-related risk. Amend clauses as appropriate, including clear definitions of the scope of environment-related cover. Provide training to appropriate staff in environmental risk awareness and application of the procedures. Key references for further guidance: ABI 1998 Joint Pollution Working Group Recommendations for the Underwriting of Pollution Risks
N N N
Environmental subpolicy/procedures.
T O W A R D S
Narrative on the processes for assessing environmental risk. Number of policies sold containing specific Environment Impairment Liability, pollution coverage. Narrative on products that provide enhanced environmental cover. Narrative on participation.
5.
G O O D
6. 7.
P R A C T I C E
8. 9.
10. Work with customers to increase understanding of environment-related risks, and provide explanation of risk reduction measures that could be taken to help reduce the cost of premiums. Develop, if possible, variable pricing that reflects the policy holders involvement in environmental risk reduction and/or improvement programmes. 11. Evaluate potential markets for environment-related insurance products (e.g. environmental impairment liability (EIL) insurance and pollution coverage) and prepare a business case if development of these markets can be justified. 12. Participate in national and international programmes and government initiatives aimed at identifying and reducing environment-related risk (e.g. climate change programmes, energy-saving initiatives).
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RISK CONTROL SURVEYING

Provides Guidelines for risk control surveyors responsible for making an appraisal of customers risk exposure and associated risk management controls supporting the underwriting of risks. Risk evaluation can be achieved through direct customer discussions including, in many cases, a site visit. As a result, risk control surveyors have an internal role in:
G G
Improving the risk understanding of underwriters; and Informing product and premium decisions.
They are also in a position to deliver customer value by enabling risk reduction and, thus, improving terms of insurance cover and facilitating achievement of reduced claims.
RISKS Financial: I Potential for under-pricing of premiums if risks are not identified. I Individual policy losses from failing to identify environmental risks. I Exposure to unanticipated portfolio losses through failing to predict environmental changes or acceptance of risks falling outside underwriting limits. I Reduced market share if insurance products do not provide adequate coverage for customers environmental risks. I Reinsurers may dispute payment where risk has not been properly assessed. Legal: I Possible indemnity/liability claims for failing to identify causes of environmental exposure. Reputational: I Damaged reputation by not working with customers to provide better understanding on insurance relevant risks and possible control measures. I Reduced shareholder confidence if risk control processes do not demonstrate appropriate attention to environment-related risks.
OPPORTUNITIES Financial: I Improved risk/cost balancing to deliver market competitive policies that adequately reduce risk to the insurer. I Increased premium income from increased cover requirements. Reputational: I Improved customer service.
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RISK CONTROL SURVEYING

Possible reporting data: 1. 2. 3. 4. 5. 6. 7. Prepare a policy for formally addressing environment-related risks during risk control surveys. Communicate this to customers in advance of the survey, identifying data needs as well as the benefits that should be derived in the medium to long term. Identify the key areas of environment-related risk and opportunity for the Policyholders and the insurer. Integrate environmental risk control questions into existing survey processes including discussion of environmental performance, risks, and provisions for environmental management. Develop guidance on the assessment and analysis of environment risk data. Consider use of case studies of known portfolio cases to supplement theoretical guidelines. Develop tools and guidance for risk control surveyors and provide training in their application. Develop a range of "added value" services for environmental risk improvement within the Policyholders business. Influence Policyholders to improve their environmental performance and relevance to policy conditions. Ensure that legal obligations are met in all cases.
N N N
Policy for addressing the environmental exposure during survey. Description of the key environmental issues/risks for the insurer. Examples of positive influence on the environmental performance of Policyholders.
T O W A R D S G O O D P R A C T I C E
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FUND AND ASSET MANAGEMENT

Provides Guidelines for the development of environmental management processes in the selection and management of investments of financial assets. These would typically have the following investment characteristics:
G G G G G
Placement of minority investments in any one company; Investments are made remotely with limited/no direct contact with the company including index placed investments; Fund managers have limited/no influence on environmental performance of the company (e.g. "nominee holdings"); Fund managers are obliged to maximise asset value returns; and The selection process decisions are critical to fund success.
Specifically, this section has been developed to respond to environmental risks and opportunities from:
G G G G
Investments in company stocks, bonds or shares; Life assurance investment products including mutual and pension funds; Valuing security or assets; and Cases where fund managers are shareholders and can thus participate in positive shareholder engagement.
RISKS Financial: I Reduction in investment value as a result of environmental damage/negative publicity for the company and/or its products. I Exclusion from some terms of reference. I Policy benefits may not be maximised in the short term if an environmental investment policy is pursued. I Loss of business through (a) bad publicity and/or (b) failure to provide environmental products required by some investors. Legal: I Meeting best practice on Socially Responsible Investment code. I Government intervention. Reputational: I Damage through association with organisations that cause, or are perceived to cause, environmental damage, or environmental funds that do not meet their claims.
OPPORTUNITIES Financial: I Assists market positioning with institutional investors.

I
Investments in companies with good environmental performance could in some cases deliver higher returns.
Legal: I Could help meet legal obligations to deliver maximum returns. Reputational: I Enhanced reputation through selecting companies with good environmental performance.
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FUND AND ASSET MANAGEMENT

Possible reporting data: 1. 2. 3. 4. Review strategic aims of the asset management business and determine whether to incorporate SRI into aims. Develop a policy which states how the company will incorporate environmental and ethical considerations into the companys overall investment strategy. Conduct a review of the existing investment portfolio to identify key areas of environment-related risk. Develop responses to main findings as appropriate. This review should be completed at defined, regular intervals. Develop and implement environmental risk/opportunity assessment mechanisms (e.g. using questionnaires, checklists, and external assistance) to complete environmental assessment of investment options prior to placing the investment. Develop a high/medium/low environmental rating to all investments. Develop a second tier, more rigorous assessment process for those funds that are marketed as environmental funds. Amend existing performance analysis processes such that investment fund managers and analysts complete, as a routine element of investment tracking and management, environmental analysis of the investment. Advise the companies in which investments are placed of the investment strategy, the fund managers considerations and information needs. Include environmental performance tracking processes to enable companies to meet these requirements. As with the screening, this analysis process needs to be more robust for environmental funds. Establish a programme to review the changing legal environment and external market pressures that impact on the Environmental Policy and hence investment strategy. Incorporate this into existing business review processes. Adapt investment strategy to support, where possible, environmentally "best-in-class". Establish ongoing processes to record the environmental performance of the companies/products in which investments are made, where the nature of the investment allows this level of involvement. Establish, if appropriate, environmental funds comprising investments in companies that have undergone environmental screening. Establish ongoing tracking processes to monitor the environmental integrity of these organisations over time.
N N N N
Investment policy incorporating environment.

T O W A R D S
Narrative on process model. Narrative on risk rating scheme and environmental screening process. Level of holding in environmental funds.
5. 6.
G O O D
7.
P R A C T I C E
8. 9.
10. Raise environmental considerations with the companies in which investments are placed, to encourage ongoing improvement in their environmental performance. Develop strategies to achieve this where appropriate.
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PROPERTY PORTFOLIO MANAGEMENT

Provides Guidelines for addressing environmental risk and opportunity in the process of selection and management of investments in commercial properties with the following investment characteristics:
G G G G
Property owner has an obligation to maximise asset value returns; Property owner has a substantial influence over the environmental performance of the building; Property owner has limited influence over the environmental performance of the tenant (if financial consequences are to be avoided); and The selection process decisions are critical to fund success.
Specifically this section has been developed to respond to the environmental risks and opportunities from:
G G G
Investments in, and development of, commercial properties, freehold or leasehold; Investments in, and development of, commercial properties through some co-investment route (e.g. limited partnerships); and Valuing property assets.
RISKS Financial:
I
OPPORTUNITIES Financial: I Higher returns through lower rates of depreciation and potential to reduce operating costs through buildings using less power and with reduced running costs. I Improved portfolio as environmental performance becomes an important selection criteria for occupiers. I Achieve a lower risk investment portfolio through inclusion of environmental risk criteria into the selection and management processes. Reputational: I Enhanced reputation amongst wider stakeholders through positive environmental positioning. I Enhanced reputation in a very visible way through being associated with environmentally friendly buildings.
Reduction in investment value as a result of environmental damage which either the tenant or the landlord has to pay for.
Legal:
I
Potential to incur environmental liabilities in the event that investments are found to be contaminated or the cause of other environmental damage.
Reputational:
I
Damage through association with buildings or tenants that cause, or are perceived to cause environmental damage, or which are the cause of local blight.
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PROPERTY PORTFOLIO MANAGEMENT

Possible reporting data: 1. 2. 3. Develop a policy that incorporates environmental considerations in asset selection, asset management and development. investment strategy. Integrate into overall
N
Identify key environmental criteria that will impact risk and opportunity and that will be used in completing environmental screening and reviews of investments and investment portfolios. Review the existing portfolio to identify the scale and range of environment related risks and opportunities, whether with buildings or tenants. Develop a response to each identified as a concern, including identifying the opportunity to obtain specific insurance cover for environmental pollution/contamination issues. This review should be repeated at defined, regular intervals. Develop and implement environmental risk/opportunity mechanisms to screen buildings, tenants and building contractors prior to making property investments or carrying out developments. Incorporate these mechanisms into the appraisal of assets and development opportunities. The screening data should be regularly updated and used in portfolio reviews. Develop, and implement where possible/appropriate, direct mechanisms to influence tenants environmental performance. These could include, for example, developing lease clauses that restrict tenants activities or require them to maintain the property free of pollution. Amend existing performance and analysis processes to allow fund managers and investment surveyors to review the environmental performance of the fund alongside investment performance. Where relevant, tenants, building contractors and suppliers should be made aware of this process. Complete annual reviews of progress. Establish a programme to produce regular reviews of the changing legal, environmental and external market pressures likely to impact on Environmental Policy and, hence, investment strategy. Incorporate this into the existing business review process. This could include completing investigations into the availability of insurance cover for pollution/contamination issues. Establish, if appropriate, environmental property funds comprising developments and investments in buildings and tenants that have passed the screening process (see 4 above). Establish tracking processes to monitor the environmental integrity of buildings, tenants, building contractors and other suppliers over time. Where possible, continue to raise environmental considerations with respect to the buildings, with the tenants in which investments are placed and with building contractors used, to encourage environmental performance improvements.
N N
Environmental policy for fund management and asset selection. Narrative on environmental screening process for buildings, tenants and suppliers. Percent of funds (by tenants and buildings) subjected to environmental analysis. Value breakdown of funds (by tenants and buildings) subjected to environmental analysis. Examples of changed business practices/policies as a result of environmental reviews and analysis (e.g. supplier and procurement screening).
T O W A R D S
4.
5. 6.
G O O D
7.
P R A C T I C E
8.
9.
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CAPITAL RAISING, EQUITY OWNERSHIP AND PROJECT FINANCE

Provides Guidelines for investment officers who participate directly in the management of companies in which investments are placed. This includes:
G G G G
Venture capital activities; Project finance; Equity holdings; and Joint ventures.
In some instances capital raising is undertaken via international wholesale markets rather than specific companies or projects. In these circumstances the potential to introduce environmental management measures is more limited, although the rating schemes for Banks involved in these markets may develop in time.
RISKS Financial: I Reduction in asset value through environmental depreciation. I Increased, unforeseen, environment-related operating costs. I Reduced dividends due to higher operating costs. I Under-performance of investment. Legal: I Liability during the investment term for non-compliance activities. I Long term liability for environmental damage caused during the investment term. Reputational: I Direct negative impact if associated with environmental damage.
OPPORTUNITIES Financial: I Potential for increased returns from investing in those companies with good environmental performance. I Potential to access niche markets for new environmental technologies that deliver high return. I Reduced operating costs through implementation of environmental cost-saving programmes. I Protection of asset value through consideration of, and action to reduce, environmental risk. Legal: I Potential for "lighter touch" from regulators for best performers. Reputational: I Improved through demonstration of proactive, responsible environmental management. I Use shareholders position to influence performance.
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CAPITAL RAISING, EQUITY OWNERSHIP AND PROJECT FINANCE

Possible reporting data: 1. 2. 3. 4. Establish environmental principles and incorporate these into capital raising and equity management policies. Communicate these developments to subject companies, as and when appropriate. Review existing equity holdings to identify their current environmental position. Use these findings to influence the development of environmental management processes for new holdings (e.g. the scope and content of the screening process for different levels of involvement and risk). Implement environmental screening in the assessment of financing applications and assign a risk category or environmental benefit (high, medium, low). For project financing this may include, where available, review of the findings of project Environmental Impact Assessments, whilst for corporate financing this would involve completion and review of the findings of a corporate environmental due diligence. Train investment officers in the application of the environmental management processes and mechanisms. For investments that are placed, establish processes and mechanisms to implement environmental management as part of the overall management process. This should be considered for implementation for investments which have a medium or high level of environmental risk. Identify the minimum environmental management and disclosure requirements and establish processes to ensure that these requirements are met during the term of management involvement/control. Ensure that environmental monitoring data are integrated with other data obtained from investment monitoring processes, so that they are appropriately considered in any decisions concerning the investment, and into investment reporting. Actively work with companies to improve their understanding of environmental issues.
N N N
Environmental subpolicies/procedures.
T O W A R D S
Narrative on environmental criteria used in equity selection processes. Narrative on the influence made on subject companies. Annual narrative on the environmental performance of equity investments. Case study to show the benefit of active engagement.
5. 6. 7. 8. 9.
G O O D
P R A C T I C E
10. Be proactive in participating in projects/corporations that deliver environmental benefit. 11. Develop environmental venture capital funds with distinct criteria to obtain longer term financing. Reference: World Bank Guidelines for International Project Finance
Page 48
COMMERCIAL LENDING
Provides Guidelines for the environmental management processes suggested for implementation as part of lending approval and management. The scope for environmental risk associated with individual lending transactions depends on:
G G G G G
The type of activity in which the borrower is engaged; The nature of the transaction with the borrower, term and value of the loan and loan securities; The extent of the borrowers potential environmental liabilities, and the borrowers management of these liabilities; Activities on adjoining sites (in some cases); and The financial capacity of the borrower to deal with its environmental risk and liabilities.
As for Capital Raising and Equity Ownership, lending may be undertaken via international wholesale markets rather than specific companies/projects.
RISKS Financial: I Reduced returns if environmental factors affect receipt of loan repayments or project profitability. I Reduction in value of securities as a result of environmental factors. Legal: I Potential to incur environmental liabilities in loan default situations. Reputational: I Damage through association with companies that cause, or are perceived to cause environmental damage.
OPPORTUNITIES Financial: I Increased business from environmental services sector. I Market opportunity to develop loan products to encourage investment in environmentally beneficial technologies. I Enhanced performance as a result of selecting businesses that are well managed. Reputational: I Enhanced reputation through association with companies with a good environmental record. I Benefits by demonstrating a proactive approach to improve the environmental performance of customers through loan conditions. I Improved customer relations. I Increasing customer awareness.
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COMMERCIAL LENDING
Possible reporting data: 1. 2. Develop an environmental risk management policy and incorporate into lending policy. Include comments on risk reduction and environmental opportunity. Identify from this the mechanisms and tasks to integrate these considerations into standard business practice. Review key environment-related factors that affect loan recovery at the time of loan approval. Identify loan options that could be adopted to manage these to reduce risk (e.g. acceptable loan securities, inclusion of environmental covenants to control the risk and options for restructuring of the transaction to reduce risk levels). Develop an environmental risk assessment methodology and integrate it into the loan appraisal process. This should include initial screening of commercial loans above a defined threshold level and more detailed assessment for those considered to present elevated environmental risk. This screening should identify, in particular, the suitability of assets that will provide loan security (e.g. land, property condition, process risk and environmental management). Train appropriate staff in environmental risk awareness and in the requirements of the new procedures. Consider formation of a Technical Team for referral of relevant lending applications. Conduct an environmental risk review of existing loans (above a threshold value). To remain practical, this could be restricted to considering borrower activity, with more detailed review of higher risk activities where land/property is held as security. Implement management actions, where possible, to reduce risk exposure (e.g. improving borrower awareness of the risk, altering loan conditions). Track external environmental developments (e.g. regulations concerning liability for environmental damage) and market needs to keep informed of changing risk exposure and monitor appropriateness of procedures accordingly. Identify opportunities for loan products that provide positive incentive for customers to improve environmental performance. Incorporate environmental performance into loan management processes. Remain informed of environmental developments that may impact on loan repayments. This may include requiring implementation of an EMS for the client as a condition of certain loans.
N
Environmental risk management policy.

T O W A R D S
Volume/value of loans screened. Narrative on training and application of processes.
3.
4. 5. 6.
G O O D
7. 8. 9.
P R A C T I C E
Page 50
DEBT RECOVERY
Provides Guidelines for those involved in recovery of debts. The following securities may give rise to environmental issues if repossessed:
G G
Land: this may have been contaminated historically or by the recent occupier and may pose direct environmental liability; Property: value may be affected by its physical condition or by the condition of the land on which it is situated. Restriction of options for future use by planning conditions. Property may be affected by blight; and Operating assets: which may require investment and management time to achieve a state of compliance these may also present a source of potential direct liability.
Other recovery strategies could involve receiverships including, administrative and law of property receiverships.
RISKS Financial: I Value of the security depreciated as a result of environmental damage or other environmental factors. I Payment for environmental remediation and clean-up costs. I Delayed recovery of funds while remedial works are undertaken and operational conditions recover. Legal: I Potential liability for environmental damage in cases of taking managerial control for defaulted loans or calling in of a loan and taking possession of the security (exceptional circumstance). Reputational: I Damage through association with environmentally damaging activities. I Damaged through failure to act damage through both action or non-action.
OPPORTUNITIES Financial: I Reduced financial impact exposure and better maintenance of value of the security. Reputational: I Benefits from making operational improvements and clean-up of contaminated areas.
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DEBT RECOVERY
Possible reporting data: 1. 2. 3. Develop policy guidance relating to the inclusion of environmental management components in the debt recovery process. Establish a process to assess the environmental risk associated with a security prior to taking ownership. This may include a physical inspection of the security by credit staff or appropriate internal/external experts. These staff should be accompanied by the borrower to avoid liability. Implement an environmental risk rating process for all property, land and operating asset repossessions high, medium, low taking into account the potential for legal action and the costs to restore the security to full value. This process should be completed for all cases it is not appropriate to set a monetary threshold for the screening process as all recoveries have implication. Complete a review of existing securities to identify the level of environmental risk with each. Implement management actions, as appropriate, to reduce risk where possible. Train staff involved with debt recovery in assessing the position of the lender in respect of current and potential future liabilities. In the event of being responsible for operational security (e.g. manufacturing plants), identify environmental compliance position and necessary actions. For example, completion of an environmental compliance audit and, for medium and high risk recoveries, consider implementation of a management system. In the event of taking possession of land which may have been contaminated, complete a site investigation to determine site condition prior to sale (divestment due diligence). Factor this information into the valuation process. Track developing legislation that will impact the value of land/property security and position of lenders in respect of liability for environmental damage associated with a security.
N N
Environmental Policy guidance.

T O W A R D S
Narrative on procedures to avoid debt liability.
4. 5. 6.
G O O D
7. 8.
P R A C T I C E
Page 52
LEASING OF EQUIPMENT AND PROPERTY

Provides Guidelines for leasing companies and other organisations providing leasing services. It includes guidance relevant to the leasing of equipment, machinery, buildings and land, although the focus is on manufacturing equipment and equipment with the potential to cause environmental damage and property leasing. The guidance applies to both:
G
Finance leases where the risk associated with use and maintenance of the asset remains with the lessee and the main risk to the leasing company is the potential financial and reputational risk associated with the lessee; and Operating leases where the lessor is exposed to environmental related depreciation of the asset and, depending on the nature of the agreement, may be considered responsible for certain aspects of the safe operation of the asset, such as maintenance and insurance.
RISKS Financial: I Loss of value of leased assets or property that is contaminated. Legal: I Potential for direct liability for damage (e.g. contamination) caused through poor equipment maintenance under leases placing maintenance responsibility on the leasing company. I Potential to become liable under operating leases for equipment/property if repossessed and at end of life. Reputational: I Negative publicity through involvement with lease agreements for equipment which is seen to be environmentally damaging.
OPPORTUNITIES Financial: I Improved performance through leasing environmental efficient property that has reduced maintenance and running costs. Reputational: I Benefits from proactive policies that support leasing of technologies to improve environmental performance.
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LEASING OF EQUIPMENT AND PROPERTY

Possible reporting data: 1. 2. Identify clauses relating to environmental principles in leasing policy documents. Review existing standard contract clauses with potential environmental implication including, for example, those relating to the maintenance, liability, inspection, monitoring and repossession of equipment and property. Amend, if appropriate, to mitigate potential for direct liability for the lessor. Develop guidance and minimum requirements for the inclusion of environmental clauses into the lease agreements for larger, bespoke lease contracts. Identify a technical team internal and/or external for referral of lease applications that present identified environmental risk. This resource could provide opinion or, when required, actively complete an environmental assessment of the applicant/application. Develop an environmental risk-rating scheme that would need to be completed for all applications. Medium and high risk cases would typically be referred to the technical team. Define environmental rejection criteria if appropriate (e.g. certain types of equipment or property). Train staff in environmental risk exposure through lease contracts and in the application of procedures. Review existing portfolio of leases to determine current areas and levels of environmental risk exposure. Identify management actions to reduce risk exposure where possible. Use this information in the development of new requirements for lease contracts (see 1 and 2). Review and establish comprehensive procedures to monitor and enforce lease conditions, in particular those relating to equipment and property inspection and maintenance.
N N
Leasing policy containing environmental principles.

T O W A R D S
3. 4. 5. 6. 7. 8. 9.
Narrative on the processes in place for reviewing and minimising environmental risk. Details of the lease portfolio review. Narrative on the assignment of environment risk ratings.
G O O D P R A C T I C E
10. Actively work with lessees to increase their environmental awareness and encourage environmental performance improvements. 11. Establish environmental lease products and services. In particular, consider providing financial incentive if environmental improvements are made and offering preferential lease terms on equipment that demonstrates an environmental benefit.
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RETAIL BANKING AND PERSONAL LENDING

Provides Guidelines for those providing retail and personal banking services. The potential environmental risk associated with these services is low in comparison to other FS activities. The activities where environmental management has some relevance include, primarily:
G G G
Personal loans; Mortgage lending; and Deposit products.
RISKS Financial: I Reduction in the value of individual properties used to secure loans as a result of the environmental issues/concerns.
I
OPPORTUNITIES Financial: I Market differentiation through offering niche "E" loans with environmental dimension. Reputational: I Enhanced within the customer base for demonstrating corporate environmental responsibility by developing niche E banking products with environmental dimension.
I
Blight of individual properties/developments adversely affecting saleability and reducing sale value.
Legal: I Potential involvement with lender liability in the event of repossession of property on contaminated land (low probability of risk arising) or other environmental risks (e.g. blight, flooding, subsidence).
Enhanced by the high public profile of customer education/awareness programmes.
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RETAIL BANKING AND PERSONAL LENDING

Possible reporting data: 1. 2. 3. Identify market demand for niche/special E banking products and/or banking services through customer surveys and market analysis of competitors. Review the availability for developing further products through formation of initiatives and ventures with other parties e.g. building federations to provide preferential interest rates on home improvements offering environmental benefit. Introduce basic environmental screening for mortgages that will identify potential environmental liabilities relating to the property (e.g. contaminated property, houses at risk of flooding, coastal erosion, radon). Work with surveyors to encourage collection of data during the property survey. Prepare guidance for mortgage appraisal to explain how environmental information should be considered. Implement customer awareness programmes to advise of the home improvements that will deliver environmental benefits.
N N N
Narrative on customer awareness campaigns.

T O W A R D S
4. 5.
Narrative on involvement with other organisations to encourage environmental improvement in personal property. Narrative on management processes and initiatives.
Page 56
PROPERTY DESIGN AND FACILITIES MANAGEMENT

Provides Guidelines for those involved with facilities management, design, and selection. Property management is one of the key areas of direct environmental impact for financial services organisations with, in particular, the following specific impacts: energy and water use, use of ozone depleting chemicals, emissions of carbon dioxide, office fitting and servicing, landscaping (also see separate section on energy and waste guidance). Additionally, property and facilities management is of importance since:
G G
Owned property can be a source of environmental liability through contaminated land and presence of hazardous building materials (e.g. asbestos); and Good environmental management can deliver tangible financial savings as well as environmental and reputational benefits.
Facilities management essentially focuses on managing and minimising ongoing impact. The timeframe to achieve change through design can be limited, but the design stage is when there is scope to achieve the most significant change and improvement.
RISKS Financial: I Reduced profitability as a result of higher facility operating costs than those of others with programmes in place. Legal: I Potential non-compliance with environmental legislation, in particular as a result of laws controlling the use of substances or materials that have environmental impacts (e.g. CFCs, lead, asbestos, radon).
OPPORTUNITIES Financial: I Improvement in the cost : income ratio. Reputational:

I
Enhanced reputation by demonstrating tangible commitment to environmental improvement.
Page 57
PROPERTY DESIGN AND FACILITIES MANAGEMENT

Possible reporting data: 1. 2. 3. 4. 5. 6. 7. 8. 9. Establish active management processes to identify and monitor consumption of environmentally restricted/banned and hazardous substances/materials (e.g. CFCs, solvent containing chemicals) and other resources e.g. water. Ensure compliance with national and international legislation and protocol (Appendix 1). Implement a programme of technological improvements e.g. change refrigeration systems, install water meters and flow regulators. Include environmental factors in procurement guidelines for office servicing contractors: in particular cleaning and decorating contractors and office equipment. Complete review of potential property-related environmental liabilities and act in accordance with recommendations. Establish policy guidelines for consideration when taking new premises including leasehold premises. Maximise life cycle potential of construction/refit solutions to meet usage expectations. Additionally, minimise further maintenance requirements where possible. Maximise use of space. Seek to achieve, where appropriate, identifiable improvements in building standards according to national schemes on environmental building design and/or management (e.g. "BREEAM": Building Research Establishment Environmental Assessment Method, in the UK).
N N N N N
Water consumption total. Programmes for elimination of ozone depleting substances. Comparison against benchmark data for building performance. Materials replaced by environmentally preferable substitutes e.g. decorating materials, cleaning materials. Number and type of awards received relating to facilities environmental performance.
T O W A R D S G O O D
10. Complete life-cycle costing and energy analysis to be included into refurbishment and new build projects. 11. Consider transport impacts when selecting new locations (in particular regional offices and branches).
P R A C T I C E
[See separate guidance on energy management, waste management and transport management]
Page 58
ENERGY MANAGEMENT
Provides Guidelines for those responsible for selecting and managing energy supply contracts. It is also relevant to managers in individual locations responsible for cost control. Energy use is a high profile, direct impact of FS organisations. Its significance to the business is increasing considerably with the debate and discussions relating to global climate change which is caused, to a large extent, by energy consumptive activities. Energy management is particularly important to FS organisations for the following key reasons:
G G G G G
Energy is a significant bottom line cost through the use of heating, lighting, ventilation, air conditioning systems and electronic equipment; Emerging legislation relevant to energy use (i.e. a climate change levy is likely to be introduced giving financial incentive for reduced energy use in high energy use sectors); Improved energy management has been implemented by several organisations in the sector, delivering cost savings and reputation benefits; Energy saving improvements directly influence climate change levy costs and greenhouse gas emission reporting; and Good energy management will be a vital and major component in any programme to achieve improved sustainability.
RISKS Financial: I Higher operating costs than those with energy saving and efficiency programmes in place. Reputational: I Potential negative impact as a result of not taking action to reduce energy consumption.
OPPORTUNITIES Financial: I Improvement in cost : income ratio through the implementation of energy efficiency and energy saving programmes.
I I
Potential market opportunity to develop new products with energy efficiency dimensions. Increased property value as a result of energy efficiency design.
Reputational: I Enhanced reputation through tangible evidence of commitment to achieving environmental performance improvement.
Page 59
ENERGY MANAGEMENT
Possible reporting data: 1. 2. 3. 4. 5. 6. 7. 8. 9. Select energy efficient equipment and technologies. Meter energy consumption: Building Management Systems and specific activities (e.g. print rooms) and conduct regular energy audits to measure improvement. Calculate energy costs including carbon tax additions include in location and Group business plans. Establish central energy monitoring and management systems to reduce consumption. Ensure maintenance regimes deliver optimum efficiency of service installation. Train and involve staff and contractors in energy awareness. Incorporate energy management needs into building design standards. Seek energy supply contracts from companies that have developed renewable sources and balance energy costs and environmental pressures in procurement decisions. Investigate potential for supply of environmentally preferable tariffs. Explore the opportunities for combined heat and power and co-generation.
N N N N N
Amount of energy consumed. Carbon dioxide (CO2) emissions (as part of greenhouse gas emissions reporting). Targets for reduced energy consumption. Narrative on examples of good practice for energy efficient design. Cost savings as a percentage of total spend. Cost savings as a percentage of total occupational costs. Reduction in carbon dioxide emissions (derived). Percentage of energy obtained from renewable sources. Accreditation in energy efficiency. Number and type of awards received for achievements in energy saving and/or energy efficiency.
T O W A R D S G O O D
[See also Property Design and Facilities Management and Transport Management]
N
P R A C T I C E
Page 60
WASTE MANAGEMENT
Provides Guidelines for those involved with setting waste management strategy and programmes as well as those responsible for organising waste management at individual locations. Key wastes in the FS sector include paper, confidential waste, toner cartridges, packaging, general waste and electrical/electronic goods. Waste production is an important direct impact for the FS organisations for the following key reasons:
G G G G G
Statutory controls place a "duty-of-care" on all waste producers for all wastes produced; Best practice is to achieve waste reduction at source, waste re-use and/or recycling, with disposal as the final option; Introduction of landfill tax which increases cost of waste disposal; Potential to achieve financial benefit from implementing waste reduction and recycling programmes; and Improving waste management is an important component of any programme to achieve improved sustainability.
Achieving waste minimisation can be assisted, indirectly, through procurement strategy (e.g. purchasing recycled paper increases the demand for recycled products, purchasing copying services rather than copying equipment to reduce waste generation.)
RISKS Financial: I Potential for higher operating costs as a result of the increased waste disposal costs. Legal: I Waste disposal regulations place legal "duty-of-care" on waste producers. Non compliance could result in fines and potentially, contribution to costs for remedying damage caused.
OPPORTUNITIES Financial: I Improvement in cost : income ratio through active waste reduction (removal at source), minimisation and recycling/reuse programmes. Reputational: I Enhanced reputation through tangible demonstration of proactive environmental commitment.
I
Engagement of staff in waste reduction and recycling activities.
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WASTE MANAGEMENT
Possible reporting data: 1. 2. 3. 4. 5. 6. 7. 8. 9. Ensure compliance with legal obligations including, in particular, "duty-of-care" requirements, packaging regulations and take-back schemes (as applicable). This includes completion and retention of waste transfer notes and subsequent documentation confirming disposal. Identify wastes produced (by volume and type) and determine the amount that is reused/recycled. Ensure that more hazardous wastes are identified, separated and subjected to the more rigorous legal requirements (Special Waste Regulations). Establish provisions to enable waste segregation and storage. This may include developing agreements with new suppliers, extending contracts with existing waste management suppliers and/or buying necessary equipment. Conduct staff training in waste minimisation and prepare internal best practice guidance in particular for paper. Encourage electronic (soft copy) document production and filing. Include waste minimisation as a contract requirement with external providers and as a factor in procurement decisions. Determine opportunities for waste reduction: paper use, packaging etc. Participate/sponsor community programmes for waste recycling/reuse: computers for schools, local paper recycling facilities. Compost organic waste from catering facilities and gardens.
N N N N N
Key waste streams by weight. Percentage of wastes recycled (by type). Narrative on waste reduction and recycling programmes and goals. Narrative on internal initiatives to raise staff awareness. Investment in community recycling/reuse schemes. Number and type of awards received for waste minimisation, recycling and recovery.
T O W A R D S
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TRANSPORT MANAGEMENT
Provides Guidelines for all those involved with determining how transport and travel is undertaken. This could range from those in senior management positions responsible for developing and managing company policy, those responsible for fleet selection and management, through to management and staff whose roles and responsibilities involve a degree of travel to achieve customer contact and internal meetings. Travel, in particular by road and air, is often a significant direct impact of the FS sector for the following reasons:
G G G G G
Daily activities, particularly staff commuting, customer visits and goods transport, generate a high level of road and air traffic; Transport management, especially car transport, is a high profile stakeholder issue due to concerns relating to congestion and exhaust emissions; Improved transport management has been achieved by organisations in the sector with tangible benefits to reputation and profitability; Fleet management costs may be affected with the introduction of environmental taxes; and Government policies relating to the company car fleets and company car taxation.
RISKS Financial: I Higher operating costs from higher fuel and travel costs. I Higher internal costs as a result of the loss of productive time. Legal: I Emerging regulations, in particular planning, which makes it more difficult to build a business around a car economy.
OPPORTUNITIES Financial: I Improved work efficiency through adoption of better travel time management and new communications technologies. I Replacing travel by increased use of video and telephone conferencing and E-mail. Reputational: I Enhanced reputation through highly visible demonstration of commitment to environmental improvement.
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TRANSPORT MANAGEMENT
Possible reporting data: 1. 2. 3. 4. 5. 6. 7. 8. 9. Implement technologies and work practices to reduce business travel demand e.g. video conferencing, planned visits and electronic business. Ensure new fleet vehicles have the latest environmental design features e.g. fuel options, fuel efficiency, and percentage recyclability. This could include attention to the emerging vehicle rating schemes. Optimise business journeys and encourage use of public and shared transport where appropriate (e.g. contracts with bus companies). Review policies for provision of company cars and consider alternative employment packages e.g. contribution to public transport fares. Conduct travel-to-work surveys and prepare environmental business plan. Provide facilities for non-car commuters e.g. bicycle racks, employee buses, car-pooling, shower and changing facilities. Provide/require driver awareness/defensive driver training for staff with high business mileage and selected contractors (e.g. freight transport companies). Introduce electronic access to services to allow reduced customer travel. Provide flexible working options to reduce travel and peak period congestion e.g. ability to work from home.
N N N N
Total business mileage. Percent of business travel on public/shared transport/air transport. Narrative on initiatives to (a) reduce travel demand, and (b) encourage reduced car use. Reduced carbon dioxide emissions from transport sources (derived). Investment in shared transport schemes for employees and community.
T O W A R D S
G O O D
10. Support/sponsor community transport needs e.g. for the disabled, schoolchildren. 11. Include transport planning in decisions on office locations, especially with respect to local branches and offices (see also Property design and facilities management). 12. More effective document production and distribution e.g. for financial statements.
P R A C T I C E
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PROCUREMENT AND SUPPLY CHAIN MANAGEMENT

Provides Guidelines for those involved with the selection and procurement of goods and services and supply chain management. This includes those responsible for setting procurement policy as well as those responsible for implementing policy at individual locations. As major purchasers of consumables (e.g. office equipment, furniture, cars, paper) and contract services (cleaning, catering), supplier management and product selection are a source of significant, environmental impact. Due to the scale of purchasing completed by the larger FS organisations it can be particularly important as:
G G
Expenditure on consumables can potentially be reduced by including environmental considerations in procurement decisions; and Demonstrating positive management of the supply chain is a high profile issue among local and global stakeholders.
RISKS Financial: I Increased operating costs from over/unmanaged consumption practices. Reputational: I Potential for negative exposure through association with the purchase/use of materials which have a high negative environmental impact in their production.
OPPORTUNITIES Financial: I Reduced operating costs from developing opportunities for material recycling/reuse and return to suppliers where possible. Reputational: I Enhanced reputation from ability to demonstrate tangible commitment to environmental improvement and using influence to improve environmental performance within the supply chain.
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PROCUREMENT AND SUPPLY CHAIN MANAGEMENT

Possible reporting data: 1. 2. 3. 4. 5. 6. 7. 8. Identify main consumables used and their environmental impact (production, use and disposal) refer to Eco-label criteria where available (see Reference Sheet 7). Identify environmentally preferable products recycled paper, recyclable plastics, non-toxic inks, recyclable cars, furniture from sustainable sources and establish policy for their use where possible. Introduce environmental considerations into a procurement policy and provide policy to suppliers. Enforce policy conditions on suppliers through audits and questionnaires. Review and amend supply contracts. Investigate options to find best overall environmental options e.g. leasing instead of purchase where this reduces disposal impact. Reduce demand for consumables where possible: e.g. minimise packaging and printing needs. Require suppliers to provide details of their environmental performance and/or require suppliers to have environmental management system certification. Introduce incentive schemes for suppliers e.g. added publicity. Complete an analysis of own "products/consumables" for example, promotional material, plastic products to determine their environmental impact. Consider manufacturing impact, use impact and disposal impact.
N N N
Proportion of products and/or total product expenditure subject to environmental selection criteria. Proportion of suppliers with Environmental Policy and environmental data for all products. Narrative on results of supply chain screening. Targets for reduced consumption of consumables. Narrative on process to review product/consumable "life-cycles".
T O W A R D S
G O O D
P R A C T I C E
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Appendices
Appendix 1:
Technical Reference sheets
These offer all those involved with environmental management and reporting an understanding of some key environmental issues, legislative requirements and best practice standards. They discuss and provide references to further information on: 1. Environmental legislation and other standards 2. Environmental management and reporting standards and guidance 3. Working with suppliers and customers which are small and medium sized enterprises 4 Climate change (also known as the "greenhouse effect" and global warming) 5. Global environmental damage: ozone layer, biodiversity, deforestation 6. Sustainable development and eco-efficiency 7. Environmental labelling and "product" take-back schemes
Appendix 2:
Further information sources on the internet
Appendix 3:
Glossary
Guidelines on Environmental Management and Reporting for the Financial Services Sector Page 67
Appendices
The following sections present background information on some of the environmental issues that are relevant to the sector.
Appendix 1:
Reference Sheet 1 Reference Sheet 2
Technical Reference Sheets

Environmental legislation and other standards Environmental management reporting standards and guidance Working with suppliers and customers which are small and medium sized enterprises Climate change Global environmental damage: ozone layer damage, biodiversity, deforestation Sustainable development and eco-efficiency Environmental labelling and "product" take-back schemes
Reference Sheet 3
Appendix 2: Appendix 3:
Further information sources on the Internet Glossary
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Appendix 1: Technical Reference Sheets

Reference Sheet 1: Environmental legislation and other standards
1.1 Legislation and international conventions
Legislation can originate at international, national and local level. Legislation developed and implemented in the European Union and the US (state level) tends to influence strongly the direction of legislative developments in Africa and Asia. Legislation has statutory force throughout Europe and the US the usual form of enforcement in the event of violation of legal requirements is a system of warnings leading to fines. In some Asian countries, and increasingly in Europe, statutory violations can result in imprisonment for the accountable Directors. Legislation is in place to control some of the direct environmental impacts of financial sector organisations but, as legislation has typically been introduced to control industry, several activities of financial sector organisations are not covered by statutory controls. Generally legislation exists for the following direct impact of the financial sector other impacts may be covered by legislation under specific national regimes:
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International conventions have significance as they commit the signatory governments to make tangible environmental improvements. In turn, these government obligations are passed to individual organisations through new or amended legislation. Early attention to the requirements of these conventions usually brings significant reputational enhancement, places the organisation in a position to be actively involved in the design of legislation and ahead of compliance when legislation is issued. Examples of some international conventions of significance to the financial sector include:
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Climate change commitments (Kyoto Agreement); Convention of Biological Diversity; and EUs Fifth (and shortly Sixth) Action Programme Towards Sustainability.
1.2 Identifying and recording relevant legislative needs

A key part of the environmental management process is identification of applicable legislative requirements, which are then taken into account in the development of targets and objectives that will deliver Policy commitments. Failing to achieve compliance is a major source of risk to organisations ranging from incurring fines/charges through to reputational damage and resulting loss of stakeholder confidence. Organisations choose between options on how responsibilities for this work are allocated between Group, individual business units, and regional territories. The Environment Manager should be aware of:
I
Waste management (in particular producer responsibility, waste minimisation programmes); Recycling, reuse and take-back of selected wastes (in particular packaging, electronic goods); Use of ozone depleting substances (primarily in air conditioning and fire-fighting systems); Employer provided transport (some countries/US states); Environmental reporting (primarily Denmark and the Netherlands for identified sectors); Allocation of environmental liability for contaminated land (some countries); Carbon taxation or equivalent as part of CO2 emissions reduction (relevant to energy use, some countries); and Liability for environmental damage (European and various countries with specific regimes).
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The environmental legislation which applies to the organisations activities (see above list for guidance on subject areas); The implications of non-compliance; The means and practice of checking and evaluating compliance status; and Any existing or potential problems or risks.
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Identifying legislation: environmental legislation can be obtained via the Internet (e.g. www.europa.eu.int), business information services (e.g. Garners), or directly from Government. For interpretation of relevance, it is typical to seek professional assistance either from internal specialists, consultants or lawyers. This interpretation will identify the steps required to achieve compliance, deadlines to achieve compliance and the implications resulting from failing to comply. As a minimum requirement this information needs to be compiled and retained at the business unit level reflecting country specific requirements (designation of geographic responsibilities can be cost efficient as it avoids duplication of effort). Some organisations elect to hold central registers that provide a resource to all business units in all territories. Evaluating compliance: it is important that the management processes include steps for checking compliance with legal requirements. Typically this is achieved through implementation of an audit process involving review of documentation and discussions with the persons responsible. To facilitate consistency in auditing between locations and business units, it is common that organisations develop audit questions. To achieve compliance improvements it is important that the audit recommendations are passed to the appropriate senior management for endorsement and sign off, and that appropriate action is taken and recorded. (See Part 2, Stage 7 for discussion of auditing as part of an environmental management and reporting system.)
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Waste minimisation guidelines (UK Environment Agency); Procurement and supply chain management principles (ISO 14000 series); Eco-labelling and life cycle standards (ISO 14000 series, EU eco-labelling guidelines); and Advisory Committee on Business and the Environment (ACBE) guidance.
* Due to their direct relevance to this Guidance, detailed discussion of these is presented in Reference Sheet 2.
The Government has relaunched Making a Corporate Commitment (MACC2) as part of the drive to improve resource efficiency. This seeks top level commitment to setting and meeting quantified targets that correspond with issues of national and international concern, notably carbon dioxide emissions, waste and water and links to the advice and support available through the Best Practice Programmes. The emphasis is on performance improvement and encourages reporting of progress in these areas, in line with the corresponding reporting guidance. Commitments can also include setting targets for raw materials use, emissions of other gases, travel plans and actions on biodiversity.
1.3 Best practice guidance

Typically agreed at a national level, by an industrial sector or within an individual organisation, best practice guidance does not have direct statutory force. However, in some countries, particularly the UK, national and industrial sector best practice is being developed in parallel with legislation such that it becomes the "required performance standard". Examples of best practice guidance of relevance to the financial sector include:
I I I I I
Environmental management (ISO 14000 series and EMAS)*; Environmental reporting (GRI Sustainability Reporting Guidelines)*; UNEP Financial Services Initiative; Energy efficiency guidance (Building Research Establishment and CADDET guidance); Government Best Practice Programme to address "direct" impacts (e.g. waste minimisation, water and energy effciency); Government Green Officiency; Transport management policies (Government White Papers);
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Reference Sheet 2: Environmental management and reporting standards and guidance

2.1 Environmental Management
Environmental Management Systems (EMSs) are paper or software based processes and procedures providing for the improving, monitoring, auditing, and reporting of environmental performance. In many cases, these systems are independently verified by third parties, thus both promoting and demonstrating compliance with external legislation/permits and internal policies. There is no mandatory requirement for financial sector organisations to develop EMSs. However, the establishment of a formal process to manage environmental performance is becoming widely recognised as good practice. Those organisations which have developed EMSs to manage their own impacts and also influence the environmental performance of their supply chain (e.g. suppliers, customers) are seen to be taking good practice to the next stage. It was largely due to supply chain demand and external stakeholder pressure that organisations in many sectors started implementing EMSs. Now, with an increasing number of organisations demonstrating that implementation of an EMS improves financial performance and reduces risk, and recognition that having an EMS demonstrates attention to good practice, there is increasing voluntary uptake. International EMS standards have been developed to assist organisations develop successful EMSs and to achieve comparability between individual, certified EMSs. The standards are:
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corresponding EMS requirements of ISO 14001, to extend participation to all economic sectors, to introduce greater flexibility in the reporting requirements recognising information needs and to introduce a logo to lend greater visibility to this scheme and its participants. It is possible to use either standard to give a framework for an EMS without progressing to achieve certification of the EMS. Many organisations are taking this approach as it enables them to realise the benefits without incurring the certification costs; it also places them in an advantageous position if retention of a certified system becomes a statutory or mandatory trade requirement in the future. Whilst ISO 14001 defines the components of an EMS, the accompanying ISO 14000 documents provide guidance on specific components of environmental management, for example: ISO 14001 ISO14010 ISO14015 ISO 14011 ISO14020/23 & ISO14024 ISO14031/32 ISO14040/43 ISO14060 Guidelines for implementing an EMS Guidelines for Environmental Auditing Draft Guidelines for Environmental Auditing of Environmental Management Systems Environmental Labelling Guidelines on Environmental Performance Evaluation Life Cycle Assessment Guide for Inclusion of Environmental Aspects in Product Standards
2.2 Environmental Reporting

As stated above, environmental performance reporting is a requirement of EMAS and is therefore a mandatory process for those organisations that have or seek certified EMAS management systems. In certain countries, most notably Denmark and the Netherlands, environmental reporting is a statutory requirement for some sectors. In most countries, environmental reporting is voluntary good practice, although there is increasing stakeholder pressure on organisations to report on their environmental (and social and ethical) performance (Refer to The Non-Reporting Report issued by UNEP and SustainAbility 1998). This pressure is beginning to be translated into statutory developments including, in particular, recent corporate governance requirements (see Accounting and Audit Standards).
ISO 14001 and accompanying standards, which are the international EMS standards; and EMAS (Eco Management and Auditing Scheme) introduced by an EC Regulation but in which participation is voluntary.
These standards are broadly similar, with the most notable difference between them relating to public environmental performance reporting which is a requirement of EMAS but not ISO 14001. The main changes to the Regulation currently being considered are: to incorporate the
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To facilitate consistency in environmental reporting, guidance for the structure and content of environmental reports has been issued. In particular:
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The Global Reporting Initiatives Sustainability Reporting Guidelines; The European Federation of Accountants (FEE) Discussion Paper "Towards a Generally Accepted Framework for Environmental Reporting"; Pensions Investment Research Consultants (PIRC) Guidelines; EU Recommendation on Financial Reporting on Environmental Issues; Various reporting guides for company reporting on greenhouse gas emissions, waste and water from the UK Department of Environment, Transport and the Regions; and Association of Chartered Certified Accountants (ACCA) A guide to environment and energy reporting and accounting.
Many of these standards have only recently been issued, showing the rapidly emerging progression towards integrating environmental management into wider business management. In some cases, these standards require provision of specific environmental information. In others the requirements of the financial standards influence the scope of environmental management processes. In most instances, these standards have generic application across all private sector companies. Exceptions include amendments to the Pensions Act, which are solely applicable to those organisations that offer pension products. Relevant Accounting and Audit Standards include, but are not limited to:
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I I I
UK Company Law Review; Pensions Act (Amended): a statement on the extent to which social and ethical dimensions are contained within investment management; The Turnbull Report: Corporate Governance; FRS 11 Impairment of Fixed Assets and Goodwill; and FRS 12 Provisions and Contingencies.
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To encourage continual improvement in environmental reporting and to recognise achievements, the UKs ACCA has been instrumental in establishing various award schemes including: the Environmental Reporting Awards Scheme (ERA), the European Environmental Reporting Scheme (EERA) and the Social Reporting Awards Scheme (SRA).
These are described more fully below.
2.3 Financial Reporting and Auditing

Financial standards generally do not specify reference to environmental issues. The professional bodies consider that the framework of accepting standards is sufficiently generic to take account of environmental issues. However, recent UK financial reporting standards (e.g. FRS 11 Impairment of Fixed Assets and Goodwill and FRS 12 Provisions and Contingencies) have made specific reference to the environment. Further guidance can be obtained from The Institute of Chartered Accountants in England and Wales (ICAEW) in their paper "Environmental Issues in Financial Reporting" (ICAEW 1996). This paper notes that "the continuing development on disclosure of non-financial performance will incorporate environmental as well as social and ethical issues in the future." With regard to auditing, the financial auditor will cover environmental issues where they are relevant to financial disclosures. A summary of the professional approach is set out in IFAC (International Federation of Accountants) International Auditing Practice Statement: The consideration of environmental matters in the audit of financial statements.
2.3.1 The UK Company Law Review

The UK Department of Trade and Industry is undertaking a fundamental review of Company Law, and is currently consulting on areas of Corporate Governance. Directors duties and corporate responsibilities to stakeholders are analysed as a basis for legislation. Although this review is still in a draft format, and will not be presented to Ministers until Spring 2001, at the moment recommendations include the requirement for an "inclusive" statement of directors duties "which require directors to have regard to all the relationships on which the company depends and to the long term as well as the short term implications of their actions". Companies should prepare an operating and financial review that would include information on relationships with stakeholders and their impact on the community and the environment. More information can be found on the DTIs website (www.dti.gov.uk/cld/review.htm.)
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2.3.2 The Pensions Act

New Regulations will address the subject of Socially Responsible Investment (SRI). Trustees of approved occupational pension schemes will need to decide and record within their Statement of Investment Principles (SIP) whether or not they wish to pursue a socially responsible investment policy; and as part of this determine their approach to the exercise of voting rights. The new Regulations require trustees to take into account, by 3 July 2000, the following in their SIPS:
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2.3.5 FRS 12 Provisions, Contingent Liabilities and Contingent Assets

Provisions are sums of money that are put aside to cover potential liabilities, and these impact on a companys Profit and Loss Account. Contingent liabilities (potential future losses) or contingent assets (potential future gains) are noted in a companys accounts but do not impact on the Profit and Loss Account. Financial Reporting Standard 12 provides advice to practitioners on when provisions and contingent liabilities or contingent assets should be applied. It guides on the use of best estimates, measurements, risk and uncertainties, and the implications of past or future events.
The extent (if at all) to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments; and The policy (if any) in relation to the exercise of the rights (including voting rights) attaching to investments.
2.4 Verification
Independent and transparent verification of corporate environmental reports is becoming more commonplace, with some companies asserting that it helps to achieve maximum corporate acceptance and reputational value from a reporting exercise. Options include auditing by the Internal Audit function with independent review, third party verification by a specialist team supplied by the corporate auditors, (which is particularly useful when combining financial and environmental auditing activity) or alternative specialist consultancies. Many organisations find the auditing process very useful in highlighting areas for attention that had previously gone unnoticed and advising on future reporting strategy.
2.3.3 The Turnbull Report

The Turnbull Committee published its final guidance on internal control in September 1999. The Guidance is designed to assist directors of UK listed companies in complying with the internal control requirements of the Combined Code appended to the Listing Rules of the London Stock Exchange. The Guidance links the identification and management of risk with the achievement of business objectives and the enhancement of shareholder value. The approach to internal control should be risk based, including business, operational and compliance risk as well as financial risk. The risk assessment and internal control procedures should be embedded in ongoing operations, and regular reports reviewed at board level. Further information and help with implementation can be sought from ICAEW.
2.3.4 FRS 11 Impairment of Fixed Assets and Goodwill

Financial Reporting Standards are produced by the Accounting Standards Board. Financial Reporting Standard 11 provides guidance on how to value fixed assets and goodwill. It helps the practitioner to look for and respond to potential reductions in value of fixed assets e.g. whether a site could or has become contaminated, hence lost value, or whether the market for a product is contracting and hence the production line itself becomes worth less.
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Reference Sheet 3: Working with suppliers and customers which are Small and Medium sized Enterprises
Though individually small and medium sized enterprises (SMEs) may not account for major environmental impacts, collectively their impact can be substantial. Even the smallest businesses can involve operations which are significant in respect of environmental compliance, impact and risk. SMEs represent a significant proportion of total business activity and, for the financial organisations that help to support them, can be a considerable source of potential environmental risk/opportunity, regardless of the scale of their business. For example, loans may be secured against property assets which may be contaminated and thus have reduced value; unanticipated cost of installation of pollution control works can disrupt cash flow; and negative stakeholder reaction in particular, local reputation could affect business performance. Additionally, SMEs frequently do not have the internal resources to implement sustainability programmes which, once implemented, can improve profitability. Similarly, they do not often have the financial resource to conduct environmental remediation projects if land is determined to be contaminated, requiring clean-up, or if an uncontrollable environmental incident occurs (e.g. flooding) which causes business interruption/loss.
3. With increasing consumer information and caution relating to the "environmental" status and performance of products, it is important for those SMEs involved with the consumer product supply chain to follow customer expectations and concerns relating to environmental issues to ensure maintenance of market share. In some instances "environmental products" can have niche market potential (e.g. organic foods), whilst in others environmental factors can reduce a market (e.g. use of genetically modified organisms). For those SMEs in the supply chain, demonstration of environmental commitment can be a prerequisite to obtaining supply. Financial sector organisations need to be aware of markets environmental demands and reactions as SMEs can be particularly vulnerable to market fluctuations. 4. SMEs can be especially vulnerable to business interruption that may be caused by unforeseen events. It is becoming more frequent that such interruptions occur for environmental reasons (e.g. flooding, weather fluctuations, product contamination, product boycotts). SMEs are increasingly seeking environmental insurance products (e.g. bonding) to protect against such risks. Potentially, this creates a new/enhanced product opportunity for the insurance industry. In the event that insurance is not in place, such incidents can have a negative impact on loan repayments, company liquidity etc. 5. Financial sector organisations can assist SMEs by providing preferential insurance and credit agreements to facilitate investment in environmental technologies and clean-up programmes. By introducing positive assistance to SMEs, financial sector organisations can demonstrate that they are achieving a positive environmental influence on third parties. 6. SMEs can be encouraged to participate in programmes to help improve environmental management (e.g. the DTI supported Project Acorn).
3.1 The significance of SMEs to financial sector organisations

1. Due to the potential exposure that the financial sector organisations have via their SME customers, there is justification for the financial sector to make efforts to educate and influence SMEs in respect of their environmental impacts. Financial sector organisations should take time to understand the SMEs business and advise SMEs where they can find assistance on detailed environmental issues and obtain free/subsidised government support e.g. energy audits, advice from the Energy Efficiency and Environmental Technology Best Practice Programmes. 2. Financial sector organisations need to identify the routes for environmental risk exposure created by SMEs and ensure that provisions are made for accountability. Also financial sector organisations need to be satisfied that the necessary financial provisions are made for environmentally high-risk sites/activities.
3.2 Questions to consider in relation to SMEs

In order to assess the environmental risk/opportunity from an SME to a financial sector organisation some useful early questions could include: [Note that this is not intended to be a comprehensive list and specific circumstances also need to be taken into account.]
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What are your main environmental impacts? What environmental legislation applies to you?
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What environmental permits do you hold? What environmental management processes do you have in place? What environmental incidents including violation of environmental legislation have you been involved with? What chemicals and other hazardous materials do you store, use, manufacture? Have you implemented any energy saving/efficiency projects, waste minimisation projects or other environmental cost saving projects? Have you had any customer or neighbour complaints regarding environmental matters? Do you foresee any environmental capital or operating expenditure needs for the next 1-5 years? Do you have any insurance to cover environmental accidents/incidents? Have you sought any independent environmental assistance in the past? Do your main clients have any environmental performance criteria built into their tendering processes? Do you require attainment of environmental performance criteria from your suppliers?
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Reference sheet 4: Climate change

Climate change, "The Greenhouse Effect" and "Global Warming" are all terms for the same environmental issue the accelerated warming of the earths atmosphere due to release of "greenhouse" gases (GHGs). The most important GHG by volume is carbon dioxide (CO2), but other compounds (e.g. methane and CFCs) have a potent effect. The primary emitters of GHGs are the industrialised nations, the major source of carbon dioxide emissions being energy production/consumption. The international community has made statutory commitments to reduce GHG emissions. 170 countries have ratified the Kyoto Protocol, developed in 1992. This requires signatories to:
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for organisations to implement energy saving/efficiency programmes, include targets for energy reduction in environmental management systems and building management programmes and, in some cases, achieve national certification for energy efficient buildings. Implementing energy efficiency measures can provide additional financial benefits through reduced building running costs. Conducting business also involves business travel, especially air and road transport, which emits significant quantities of GHGs and also contributes to other forms of air and noise pollution and congestion. The UK government is increasing the tax burden for those using company cars, and eliminating tax breaks for fleet vehicles. Organisations can enforce policies to reduce business travel, and take advantage of technology such as videoconferencing, thus reducing both GHG emissions and travel costs. 2. Energy purchasing costs will change with the introduction of carbon taxation, most imminently in the UK and Germany. The impact of these taxes will vary depending upon the structure of the taxing mechanism. It is anticipated that for most industries with high energy use, e.g. aluminium production, the taxes will cause an increase in total annual energy spend. However, for the financial sector in the UK, the increased energy cost is likely to be offset by parallel cuts in National Insurance Contributions. Organisations that position themselves efficiently in areas such as investing in renewable energy, and implementing energy efficiency measures, could reap financial rewards. The Netherlands, for example, offers tax breaks for those using "green investment funds" and accelerated depreciation of environmental technology investments. 3. The physical impacts of climate change e.g. flooding and extreme weather occurrences, are already being linked to increased insurance claims and are generating increased market demand for "climate related" insurance products. There is, therefore, a direct financial impact on the financial sector organisations both in terms of cost to the business and potential for new services/products. 4. Through capital raising and lending practices, financial sector organisations can actively encourage projects to include energy efficiency components (e.g. energy efficient housing developments) or selectively finance projects that create energy with zero or low GHG emissions (e.g. renewable energy projects, co-generation plants). With GHG tax breaks and institutional funding, these projects are in a favourable position to deliver good financial returns. 5. Financial sector organisations can offer services to the companies that will be involved in reducing GHG emissions e.g. emissions trading for which the UK is likely to be an international centre. Examples include insurance, lending and financing products.
Reduce GHG emissions to their 1990 level by 2000; and Achieve a 5% reduction worldwide on 1990 levels in the period 2008-2012 (contributions to achieving this global target have been apportioned amongst the industrialised nations).
The mechanisms to enable achievement of the Kyoto targets are still under discussion (ratification is still to be achieved) but will include various market mechanisms including emissions trading and clean development mechanisms. Financial incentives to reduce energy use have been introduced in some countries through carbon taxes (these are to be introduced in the UK in 2001). Various guidance is available to assist organisations to identify and implement energy saving programmes and thus reduce GHG emissions. In several countries, national organisations can complete energy audits and give building certification depending upon the level of energy efficiency achieved. The UK government offers free advice to businesses through its Energy Efficiency and Environmental Technology Best Practice Programmes (see Appendix 2 for contact details).
How does this impact financial sector organisations?

1. Mandatory pressure to reduce GHG emissions from corporate activities will increase as the Kyoto requirements are implemented. Offices consume a significant amount of energy as a result of heating, lighting, ventilation, air conditioning systems and computer networks in particular. It is recognised good practice
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Reference Sheet 5: Global environmental damage: ozone layer, biodiversity and deforestation
The "ozone hole", the thinning of the protective layer of ozone in the atmosphere has been well publicised. The chemicals responsible are ozone depleting substances including CFCs and HCFCs. Primary sources include refrigeration systems, halon fire-fighting systems, air conditioning units, certain industrial discharges and aerosols. International agreements, including the Montreal Protocol (1989) and Montreal Amendment (1999) have been ratified by 165 countries (including the UK), and have led to bans on continued manufacture of the identified products, commitments to report volumes of ozone depleting emissions and phase out their use at statutory deadlines set between 2000 and 2030 to achieve zero emissions. Preferable substitutes for ozone depleting substances have been developed, and many new alternative products are coming into the marketplace. Biodiversity is the term that encompasses the variety of life on the planet, and the need to protect species, habitats and social groups. It was established as a global issue in the mid1980s and achieved international commitment in 1992 when 156 nations and the EU signed the Convention of Biological Diversity at the Rio Earth Summit. Many others have since signed it. All participants have committed to protect biodiversity in accordance with the Global Biodiversity Strategy. Many organisations assist in achieving biodiversity by careful procurement practices and participation in biodiversity programmes. Deforestation is also a highly publicised global concern, particularly the destruction of tropical rainforests, which are areas of outstanding biodiversity. Deforestation results from the clearance of land to meet the demand for timber products in the local community and industrialised nations. Protection of forests is included as an element within the Convention of Biological Diversity that has led to bans on the use of some timbers.
How do these impact financial sector organisations?

1. The sector has traditionally used significant volumes of ozone depleting substances, especially in air conditioning and fire-fighting systems. Replacement programmes need to be implemented to make use of appropriate substitutes. Where use continues, this needs to be documented and reported, with total replacement by non-ozone depleting substances achieved in accordance with the laws ratifying the Montreal Protocol. 2. As significant consumers of paper and timber products (e.g. furniture, cardboard), financial sector organisations should consider using paper made from recycled materials, sustainable forestry or community forests. Purchase of other products e.g. inks and plastics should also take into account the impacts of their manufacture, use and disposal on biological diversity. Product impact data will gradually become more readily available with new legislation and best practice requirements coming into force. 3. Financial sector organisations can achieve reputational benefit through direct participation in biodiversity programmes including, for example, reforestation, social programmes, conservation initiatives. As well as global programmes, efforts towards biodiversity can be achieved at a local level through attention to planting schemes on company or local community property. 4. Through investments, financial sector organisations can actively achieve improvements in global biodiversity in particular by advising customers of individual actions to assist local biodiversity, by developing environmental investment programmes, by setting preferential loan criteria for projects with positive biological enhancement. For example, exploring with customers the opportunities to redirect investments from logging into sustainable management of biological resources such as Forest Stewardship Council certified timber production. 5. Financial services organisations, as consumers of paper and timber products, can have a significant direct influence in this area through careful product selection and making contributions to biodiversity conservation programmes.
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Reference Sheet 6: Sustainable development and eco-efficiency

Sustainable development is commonly defined as "development that meets the need of the present without compromising the ability of future generations to meet their own needs". Sustainable development has become the ultimate target for all organisations that recognise their environmental, social and economic impacts and are working towards reducing them. Sustainability regarding the performance of a process or product is an established concept, but achievement is a long-term process with no well-established indicators against which to measure performance. Many companies have started programmes, with active management of environmental issues widely recognised as the point at which to start. Guidance will develop in time, based on the experience of companies leading in the implementation of sustainable development, to identify the further steps that need to be taken to integrate management consideration of environmental, social and economic issues which is necessary if sustainability is to be achieved. Governments world-wide have ratified the conclusions of the Earth Summit conferences and resultant conventions which commit them to achievement of the principles of sustainable development. To assist this and to quantify progress, national indicators of sustainable development have been issued, but it remains with each organisation to determine how sustainability will be achieved by using these and other indicators. There is no singular legislation requiring progress towards sustainability but achieving more sustainable practice is the underlying theme of some recent legislation. Eco-efficiency is closely connected to sustainability. Eco-efficiency is defined as being reached "by the delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the life-cycle, to a level in line with the Earths carrying capacity".

1 Financial sector organisations can work towards achieving environmental sustainability and improved eco-efficiency in direct operations. All the environmental issues discussed in these Guidelines are components of sustainable operations. For example: purchasing less means less resource use and less waste; purchasing well enables materials reuse and protection of threatened species/habitats; and using less energy in buildings and transport reduces demand on fuel resources and global warming. Management programmes should be geared to set targets that deliver improved sustainability over time. 2. Stakeholder pressures for organisations to demonstrate they are progressing towards sustainability are increasing. Financial sector organisations are particularly under pressure due to (1) the high visibility of banking premises and practices to the public, (2) public perception of the ability of financial sector organisations to influence future developments at the government level and at the client level and (3) responsibility to customers to provide good, long-term investment decisions (i.e. ethical investments, sustainable businesses). Failure to respond to stakeholder pressure will create significant brand risk. Direct financial implications may also emerge e.g. increased costs of obtaining supplies, product taxes (e.g. energy). 3. Through lending practices, insurance policies and asset management activities, financial sector organisations are in a pivotal position to encourage and influence wider, global sustainability. Financial sector organisations can encourage corporate customers to demonstrate sustainability components in design and/or operation, can support sustainable developments (e.g. renewable energy projects, waste recovery technologies), give preferential loans for conservation projects, and establish ethical investments. 4. As all financial sector organisations make decisions for the long term, financial sector organisations need to identify criteria that enable assessment of sustainability to be incorporated into business decision-making processes.
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Reference sheet 7: Environmental labelling, and product take-back schemes

7.1 Environmental Labelling
This can take the form of:
I
There is a rapidly developing trend, particularly in Europe, to establish statutory mechanisms requiring product manufacturers to recover and reuse ("take-back") their products when they become waste. This is also known as "producer responsibility". The Packaging and Packaging Waste Directive (94/62/EC) establishes responsibility for those involved with the production, use and sale of packaging to take-back a defined percentage of the packaging produced/handled. A draft European Union Directive has been issued which will place requirements on manufacturers of waste electrical and electronic equipment (WEEE) to make provisions for accepting return of WEEE products. In addition, a Directive requiring vehicle manufacturers to recover end-of-life vehicles is currently being drafted by the European Union. Although the European Union is driving these developments, in a global marketplace they are likely to emerge as statutory requirements elsewhere.
Accredited schemese.g. EU eco-label (approximately 10 products including copying paper and light bulbs), FSC Timber Certification Scheme. These require manufacturers to satisfy certain criteria if they want to participate and enable consumers to exercise buying preferences. Mandatory labelling e.g. EU Energy Label where manufacturers and retailers of certain goods must comply with labelling requirements. This enables consumers to exercise an informed choice. Voluntary declarations where businesses must comply with consumer protection law, and good practice is presented in ISO 14021 and (in the UK) the Green Claims Code. This encourages environmental characteristics to be used in promoting products and services

1. Financial sector organisations are consumers, in particular of paper, cleaning products and inks. Taking environmental criteria into account in product selection and, where possible, purchasing eco-labelled and recycled products can significantly reduce one of the major direct environmental impacts of the sector. Such practice also demonstrates adherence to best practice and commitment to corporate environmental stewardship through recognising that, by managing product selection, an organisation can positively influence global environmental issues. 2. As consumers, financial sector organisations also produce significant quantities of waste, for which they are liable. Efforts should focus on good waste and resource management, concentrating on reducing the volume produced, and encouraging reuse or recycling where practicable. Organisations should make arrangements with manufacturers/suppliers and/or participate in schemes to enable product take-back where possible. Good resource and waste management practices can result in considerable financial savings. 3. Financial sector organisations should be aware of the major impact that producer responsibility legislation, and associated costs of compliance, may have on their customers. Regulations such as those concerning packaging are being adapted to apply to smaller sized companies, which may not be aware of either the legislative requirements on them or how they should respond. Financial sector organisations can play a very positive role in communicating these environmental developments to clients, particularly SMEs, and positively encouraging adoption of environmental best practice e.g. through business policies that take into account the environmental commitment and performance of the SMEs.
The European Union has introduced a series of Decisions (equivalent to European best practice) creating a system for "eco-labelling" of defined products. To date Eco-label criteria have been issued for approximately ten products including copying paper and light bulbs. Manufacturers applying for an Eco-label ensure that their products meet the specified criteria. Therefore, products displaying an eco-label have been demonstrated to have minimum environmental impact through all stages of their life-cycle: manufacture, use and disposal. Separately, many products display their recycled material content through a triangle logo.
7.2 Product take-back

The European Union supports a list of preferences for waste management with the most preferable option being waste reduction, followed by reuse, recycling, energy recovery and finally disposal. Recycling of waste materials is now well established for certain materials including paper, glass and metal, with recycling facilities being developed for other materials including electrical and electronic goods, and vehicles.
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Appendix 2:
Subject
General Environmental Information
Further information sources on the Internet

Web Address
http://eco-web.com/
Organisation
Green Pages
Comments
Global directory of environmental technology contact details for Ministries, NGOs and Environmental experts worldwide Gateway to environmental information, across the EU and country specific Environmental legislation and policy development Access to legal texts Non-profit, non-partisan, world federation of national associations for environmental management and sustainable development. INEM aims to help companies improve their environmental and economic performance. The site provides best practice, case studies, indicators and benchmarks, and environmental management tools Raises profile of the environment industry in UK and abroad. Encourages UK firms to invest overseas Information source for central government, environmental policy and strategy in the UK Environmental news, information, research results, pollution inventory, guidance for business and industry Source of environmental data, legislation and guidance UN interaction with business partners
European Environment Agency
www.eea.eu.int/
European Commission European Environmental law homepage International Network for Environmental Management
http://europa.eu.int/ www.asser.nl/EEL/index4.htm www.inem.org/
UK Department of Trade and Industry Joint Environmental Markets Unit UK Department of Environment, Transport and the Regions UK Environment Agency
www.dti.gov.uk/jemu
www.detr.gov.uk
www.environment-agency.gov.uk
US Environmental Protection Agency UN Global Compact
www.epa.gov www.un.org/partners/business/globco mp.htm www.unep.org www.wri.org
United Nations Environment Programme World Resources Institute
UNEP site with much environmental information Information on global resources
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APPENDIX 2: Further information sources on the Internet

Subject
Climate Change
Organisation
Building Research Establishment (UK) BREEAM Environmental Assessment Method CADDET ETSU
Web Address
www.bre.co.uk http://www.bre.co.uk/sustainable/ser vice1.html www.caddet-ee.org/
Comments
Energy efficiency Environmental assessment of buildings
Energy efficiency information and products ETSU is part of AEA Technology Environment which provides objective support and solutions to governments, agencies and industry, helping to meet environmental challenges Description and background on the Institute
www.etsu.com
Regional Institute of Environmental Technology Asia The Earth Council
www.riet.org/eis/eis.htm
www.ecouncil.ac.cr.rio/focus/report.e nglish/Unctad.htm 0800 585794
Emissions trading information
UK Government Best Practice Programme Helpline UK Government Best Practice Programme Energy Efficiency UK Government Best Practice Programme Environmental Technology UK Department of Environment, Transport & Regions United Nations Framework Convention on Climate Change
Publication on "Green Officiency: running a cost-effective, environmentally aware office"
www.energy-efficiency.co.uk Free advice for UK businesses
www.etbpp.gov.uk Free advice for UK businesses
www.detr.gov.uk/environment/envrp/ gas/index.htm www.unfccc.de/index.html
Environmental Reporting: Guidelines for Company Reporting on Greenhouse Gas Emissions Description of the Convention and background
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Subject Organisation
US Environmental Protection Agency
Web Address
www.epa.gov/oppeoee1/globalwarmin g/sitemap.html www.green-alliance.org
Comments
Source of detailed US information on climate change
Environmental labelling and waste take back
Green Alliance
"Indicating Right: Environmental Performance Indicators for the Waste Management Sector" Covers issues of developing indicators for climate change, water use, energy use, transport Waste Minimisation Best Practice Guidelines for Office Based Services Presentation on WEEE takeback
UK Department of the Environment, Transport & Regions UK Department of Trade and Industry (DTI) WEEE UK Government Best Practice Programmes: Environmental Technology Global environmental damage Forest Stewardship Council (FSC) United Nations Environment Programme Sustainable development and eco-efficiency Dow Jones Sustainability Index
www.detr.gov.uk/environment/wastest rategy/index.htm www.smtuk.demon.co.uk/weee/
www.etbpp.gov.uk Helpline 0800 585794 www.fsc-uk.demon.co.uk www.unep.org/ozone/ www.sustainability-index.com
Publication on "Green Officiency: running a cost-effective, environmentally aware office" Certified timber production Ozone depleting chemicals Global index of companies rated according to their perceived sustainability Certified timber production Projects and publications which promote sustainable development A service of the Sustainable Development Communications Network This Internet tool allows users to navigate easily between websites that deal with the principles, policies, and best practices for sustainable development.
Forest Stewardship Council (FSC) Green Alliance Sustainability Web Ring
www.fsc-uk.demon.co.uk www.green-alliance.org http://sdgateway.net/webring/defaul t.htm
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UK Department of the Environment, Transport & Regions MACC
Web Address
www.macc2.org.uk
Comments
Making a Corporate Commitment Government Campaign to encourage resource efficiency and environmental performance on issues of national and international concern UK sustainable development strategy and sustainable development indicators UNEP Environment Legal Instruments and Initiatives Forum for initiatives on sustainable development
UK Department of the Environment, Transport & Regions SD United Nations Environment Programme World Business Council for Sustainable Development World Resource Institute Environmental legislation and other standards Advisory Committee on Business and the Environment
www.detr.gov.uk/environment/sustain able/index.htm www.unep.org/SEC/ www.wbscd.ch/aboutus.htm#top
www.wri.org/wri/office/material.htm www.environment.detr.gov.uk/acbe/in dex.htm
Green offices case study Forum for strategic dialogue between business and government on environment and sustainable development issues. Mobilises the business community to demonstrate good environmental practice Standards for environmental auditing and reporting Energy efficiency Energy efficiency information and products Environmental legislation and policy Eco-Management and Audit Scheme Council Regulation and other information Gateway to environmental information, across the EU and country specific Waste minimisation guidelines Source of law
British Standards Institute Building Research Establishment (UK) CADDET European Commission
www.bsi.org.uk www.bre.co.uk www.caddet-ee.org/ http://europa.eu.int/comm/environm ent/emas
European Environment Agency
www.eea.eu.int
European Environmental law homepage
http://www.asser.nl/EEL/index4.htm
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Global Reporting Initiative International Standards Organization United Nations Environment Programme UK Department of the Environment, Transport & Regions UK Department of Trade and Industry
Web Address
www.globalreporting.org www.iso.ch www.unep.org/SEC/ www.detr.gov.uk/itwp/index.htm
Comments
Publish Sustainability Reporting Guidelines (March 1999 draft) ISO 14001 series on environmental management UNEP Environment Legal Instruments White Papers and policy on integrated transport
www.dti.gov.uk/cld/review.htm
Department of Trade and Industry, for copies of the Company Law consultation paper Statement and signatory list for financial services environmental initiative Guidance for business and industry on environment Publications and guidance on environmental and energy reporting
United Nations Environment Programme Financial Institutions Initiative UK Environment Agency Environmental auditing, management systems and reporting guidelines and standards Association of Chartered Certified Accountants British Standards Institute Business in the Environment
www.unep.ch/etu/finserv/fin_home.h tm www.environment-agency.gov.uk www.acca.org.uk
www.bsi.org.uk www.business-in-environment.org.uk
Standards for environmental auditing and reporting Publications and information including performance measurement and benchmarking. Published the Fourth Index of Corporate Engagement (1999-00) which compares the extent to which companies are engaged in environmental management and how companies assess and manage environmental performance in key areas Provides CONTOUR, an environment, health and safety benchmarking tool, which can be used to establish what best practice is and enables organisations to measure themselves against it
Confederation of British Industry
www.cbi.org.uk
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European Commission
Web Address
http://europa.eu.int/comm/environm ent/emas www.euro.fee.bc
Comments
Eco-Management and Audit Scheme Council Regulation and other information Discussion Paper "Towards a Generally Accepted Framework for Environmental Reporting" January 1999 Publish Sustainability Reporting Guidelines (March 1999 draft) "Banking on the future" (1997) Report provides an overview of banks performance in relation to the aspirations of the UNEP statement on Environment and Sustainable Development Published "Environmental Issues in Financial Reporting" 1996
European Federation of Accountants (FEE) Global Reporting Initiative Green Alliance
www.globalreporting.org www.green-alliance.org
The Institute of Chartered Accountants in England and Wales Institute of Environmental Management and Assessment
www.icaew.co.uk
www.emas.org.uk
The UK Competent Body for EMAS, responsible for administering the scheme and maintaining a register of organisations that are participating Publishes "ICC Guide to Effective Environmental Auditing", and UNEP/ICC/FIDIC Environmental Management System Resource Training Kit Best practice, case studies, indicators and benchmarks, and environmental management tools, information on standards ISO 14001 series
International Chamber of Commerce
www.iccwbo.org/
International Network for Environmental Management International Organization for Standardization Organisation for Economic Cooperation and Development
http://www.inem.org/
www.iso.ch
www.oecd.org./daf/investment/guidel ines/mnetext.htm
Text of the OECD Guidelines for Multinational Enterprises, recommendations for companies to act in harmony with the policies of the countries in which they operate
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Pensions Investment Research Consultants
Web Address
www.pirc.co.uk
Comments
Publishes reports, trends, analysis and survey data on issues of corporate governance and corporate responsibility including "Environmental Reporting 2000: The PIRC Survey of the FTSE All Share Index (2000)" The SERM rating provides an overall, balanced assessment of the financial exposure of an organisation to its safety and environmental risks, relative to its ability to manage them and to meet potential liabilities Environmental Reporting: Getting Started
Safety and Environmental Risk Management Rating Agency Ltd.
www.serm.co.uk
UK Department of Environment, Transport & Regions United Nations Environment Programme
www.detr.gov.uk/environment/envrp/r eport.htm www.earthprint.com/cgibin/ncommerce3/ExecMacro/UNEP/se archrslt.d2w/report www.bba.org.uk http://www.inem.org/
To order copies of "The Non-Reporting Report" 1998, UNEP and SustainAbility. Explores barriers to and opportunities for environmental reporting Publishes environmental guidance for small businesses Produce on-line EMAS Tool Kit for SMEs
Small and medium sized enterprises
British Bankers Association International Network for Environmental Management
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Appendix 3: Glossary
ACCA Association of Chartered Certified Accountants Biodiversity Embraces the variety of life and "genetic stock", generally in relation to a particular area or ecosystem. The protection of biodiversity is widely recognised as important so that organisms and ecosystems remain adaptive to changing environmental circumstances and also available as a resource to human beings.
International agreement to take measures to slow down climate change have now been introduced, the most recent being the Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC). The Kyoto Protocol commits its signatories (including most major economies) to reduce emissions of six key pollutants, CO2, methane, Nitrous Oxide (N2O), PFCs (perfluorocarbons) SF6 (sulphur hexafluoride) and HFCs (hydrofluorocarbons).
Collateral
The property or asset that is given, deposited or pledged to ensure the fulfilment of an obligation.
Compliance BREEAM Buildings Research Establishments Environmental Assessment Method. Contaminate Carbon dioxide (CO2) Combustion product, emitted primarily from power stations and vehicles, and primarily responsible for climate change.
Acting within the requirements of the laws or regulations.
Cause to make impure, unclean or unfit for use by contact or addition of something, specifically in context of making land or water unfit for use by spilling, leaking, etc. of hazardous or toxic chemicals.
Carbon taxes
Financial mechanisms introduced with the aim of reducing emissions of carbon dioxide and thus the consequences of climate change. In the UK a Climate Change Levy has been introduced as a tax on energy suppliers. The tax varies depending on the method of energy generation, and renewable energy and some combined heat and power schemes are exempt. The energy producers administer the levy on their customers, with discounts for sectors that have voluntarily implemented energy efficiency measures.
Convention on Biological Diversity
A Convention designed to protect genetic variety, signed by 156 nations and the EU at the 1992 Earth Summit. Signatories commit to protect biodiversity in accordance with the Global Biodiversity Strategy.
DETR
UK Department of the Environment, Transport and Regions.
Direct risk Climate change The most accurate term for the global environmental change also known as the greenhouse effect and global warming. A worldwide scientific consensus has emerged that emissions of certain pollutants (particularly CO2) is causing the suns heat to be trapped rather than remitted to space, causing a global average increase in temperature, resulting in potentially significant regional changes in climate, such as increased storm frequency, drought and sea level rise.
Risk of loss to the lender as a result of one's own or others' action.
Eco-efficiency
The delivery of competitively priced goods and services that satisfy human needs and bring quality of life, while progressively reducing ecological impacts and resource intensity throughout the lifecycle, to a level in line with the Earths carrying capacity.
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Eco-labels
Labels attached to products which meet national or EU criteria for environmental performance throughout the products lifecycle. Although national schemes exist such as the German "Green Dot", the EU has introduced Decisions in this area and issued eco-label criteria for a number of product groups e.g. copying paper.
Environmental Reporting
Internal or external reporting of environmental performance. Can take the form of an addition to a companys annual report, or form a separate document.
Environmental Screening Eco-management and Auditing Standard Non-mandatory EU Regulation governing environmental management and reporting, against which companies are verified and certified. Environmentally Sensitive Fluid discharge, generally in the context of waste-water from a facility. Global Warming Emission A discharge; generally in the context of the release of wastes or other by-products into the air or water.
A preliminary process completed by a financial institution to assist in determining which transactions should be subject to more in-depth environmental risk assessment.
Description gauging relative potential of a company or activity to affect a negative impact on the environment; sometimes used to describe the susceptibility of a natural resource to environmental damage.
Effluent
See Climate Change.
Greenhouse Effect
Environment
The living and non-living surroundings, natural or man made, which make life on earth possible. Greenhouse Gases
The insulating effect of the earths atmosphere which keeps temperatures high enough for life. This is a natural and vital effect, but when increased by human activities (the enhanced greenhouse effect) results in climate change.
Environmental Audit
An investigation of processes and procedures of a company or site with respect to its compliance with applicable laws and regulations and impacts on environmental conditions.
Gases that cause and accelerate the greenhouse effect (see above). Key greenhouse gases are carbon dioxide (produced by combustion) and methane (often produced by anaerobic digestion such as occurs in landfill sites, and from the guts of cattle and termites), but also Nitrous Oxide (N2O), PFCs (perfluorocarbons) SF6 (sulphur hexafluoride) and HFCs (hydrofluorocarbons).
Environmental Due Diligence
The collection and assessment of data relative to environmental conditions or impacts prior to a transaction, to identify and quantify environment related financial, legal and reputational risks.
Health & Safety
Environmental An assessment of the resultant impacts on the natural or human Impact Assessment environment of a proposed project or development, usually performed by an environmental consultant.
The set of issues which are concerned with the welfare of employees, both with regard to occupational health and accidents at work. Management of Health and Safety and Environmental issues is often combined.
ICAEW
Institute of Chartered Accountants of England and Wales.
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IFAC
International Federation of Accountants.
Montreal Protocol (1989)
Impairment
Damage or injury.
Indemnify
To agree to compensate or reimburse an individual or other legal entity in the event of a loss incurred as a result of the signatory's actions. Ozone Layer Depletion
International agreement on reducing the production and use of ozone depleting substances. The Protocol has been ratified by 165 countries. Signatories commit to banning the manufacture and use of certain products, reporting volumes of ozone depleting emissions and phasing out their use in accordance with deadlines towards zero emissions in 2030.
Indirect risk
Risk incurred as a result of negative impact on another party, for example, when a lender is affected by a negative impact on a borrower.
ISO
International Standardisation Organisation. standards for environmental management.
Produces ISO 14000
The reduction in the density of ozone in the Earths stratosphere observed since the 1980s, particularly in the Antarctic and subsequently in the Arctic. Ozone depletion allows increased levels of harmful ultra-violet radiation to reach the Earths surface, and if unchecked this could cause major damage to life, including crop failure. The use of CFCs and other compounds (HCFC, Halons, Methyl Bromide, 1,1,1 Trichloroethane) has been identified as the major cause of ozone layer depletion and their use is therefore being phased out, as agreed in the 1988 Montreal Protocol.
Joint and Several Liability
The legal concept that any one of many contributors to damage can be held responsible for all of the damage.
Pollution
Often used in same context as contamination, pollution implies damage through contamination.
Kyoto Protocol
International agreement to take measures to slow down climate change. The Kyoto Protocol to the UN Framework Convention on Climate Change (UNFCCC) commits its signatories (including most major economies) to reduce emissions of six key pollutants: CO2, methane, Nitrous Oxide (N2O), PFCs (perfluorocarbons) SF6 (sulphur hexafluoride) and HFCs (hydrofluorocarbons).
Producer responsibility/ Product takeback
Measures requiring producers of goods, such as packaging, cars and electronic equipment, to take responsibility for collecting and recovering/recycling the product at the end of its life.
Public opinion Landfill The site of the disposal of domestic or industrial waste or rubbish (or possible hazardous wastes) on land, frequently covered with soil. Recycling Liability The state of being legally bound or obligated to make good any loss or damage that occurs in a transaction.
The opinion of the general public, a force in determining social and political action.
The process of reprocessing old products to use as raw materials. Applied commonly to metals, paper, glass and plastic. If no reprocessing is involved and the product remains in its original form (e.g. returnable beverage bottle) then this is Reuse.
Mitigation
The act of making more moderate, such as to decrease the negative impacts through certain action.
Regulation
A rule, ordinance, or law by which conduct is regulated.
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Remediation
Cleanup or other correction of contamination or pollution.
Representations & Warranties
Statements of fact (representations) regarding the conditions present made by a party combined with certain obligations or duties (warranties) to perform if conditions are not as represented. The property or asset that is given, deposited or pledged to ensure the fulfilment of an obligation.
Security (Collateral)
SRI
Socially Responsible Investment.
Strict liability
Legal concept that a party can be held liable without specifically causing the damages (without fault). The progression of businesses involved in the supply and purchase of materials and goods from raw materials to final product.
Supply chain
Sustainable Development
The concept of meeting the needs of the present while not compromising the ability of future generations to meet their own needs.
Turnbull Report
Guidance produced in 1999 in order to assist directors of UK listed companies in complying with the internal control requirements of the Combined Code appended to the Listing Rules of the London Stock Exchange. Includes guidance on risk management, related to operational and compliance risk as well as financial risk.
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Printed November 2000

Guidelines On Environmental Management and Reporting For The Financial Services Sector - FORGE

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Part 3: Business Activity Guidelines

Part 2: Toolkit for developing a management and reporting system . . . . Page 8

National governments Institutional investors Shareholders Customers Suppliers Employees

Figure 1: Summary of key drivers for environmental management and reporting

Drivers to implement environmental management and reporting

1.2 What are the benefits of environmental management and reporting?

1.4 How can these environmental impacts be managed and reported?

Figure 2: Integration of environment into core business processes

Integrated environmental management and reporting

1.5 About these Guidelines

2.2 Phasing system implementation and development

2.3 Implementation toolkit

Business activities; Environmental impacts; and Environmental opportunities.

2.2.1 Business activities

2.2.2 Environmental impacts

2.3 Implementation stages

Stage 1: Develop the evidence

Stage 4: Draft an Environment Policy and objectives

Stage 5: Design and develop the management system components

Stage 6: Implement and operate the management system

Stage 7: Audit the management system

Stage 9a: Prepare environmental reports (internal)

Stage 9b: Prepare environmental reports (external) (external verification is advised)

STAGE 1: DEVELOP THE EVIDENCE

TIPS FOR IMPLEMENTATION

STAGE 1: DEVELOP THE EVIDENCE

TIPS FOR IMPLEMENTATION

STAGE 2: OBTAIN BOARD APPROVAL

TIPS FOR IMPLEMENTATION

STAGE 2: OBTAIN BOARD APPROVAL

TIPS FOR IMPLEMENTATION

STAGE 2: OBTAIN BOARD APPROVAL

TIPS FOR IMPLEMENTATION

STAGE 3: COMPLETE AN ENVIRONMENTAL REVIEW

TIPS FOR IMPLEMENTATION

STAGE 3: COMPLETE AN ENVIRONMENTAL REVIEW

STAGE 3: COMPLETE AN ENVIRONMENTAL REVIEW

TIPS FOR IMPLEMENTATION

STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

TIPS FOR IMPLEMENTATION

STAGE 4: DRAFT THE GROUP ENVIRONMENT POLICY AND OBJECTIVES

TIPS FOR IMPLEMENTATION

STAGE 4: DRAFT THE GROUP ENVIRONMENTAL POLICY AND OBJECTIVES

TIPS FOR IMPLEMENTATION

STAGE 5: DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TIPS FOR IMPLEMENTATION

STAGE 5: DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TIPS FOR IMPLEMENTATION

STAGE 5: DESIGN THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

STAGE 6: IMPLEMENT AND OPERATE THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TIPS FOR IMPLEMENTATION

6.2 Implement first phase of the programme

STAGE 6: IMPLEMENT AND OPERATE THE ENVIRONMENTAL MANAGEMENT SYSTEM (EMS)

TIPS FOR IMPLEMENTATION

STAGE 7: AUDIT THE EMS

TIPS FOR IMPLEMENTATION

STAGE 7: AUDIT THE EMS

TIPS FOR IMPLEMENTATION

7.5 Agree recommendations with implementation teams

Business Unit management and