Sustainable banking in Romania

To address the environmental problems of Romania, IFC together with European Bank for Reconstruction and Development (EBRD) financed and commissioned a training program on environmental and social risk assessment for the largest commercial bank in the country, Banca Comerciala Romana. Within a year, 600 credit officers have been trained and 700 credit projects reviewed according to environmental and social standards. Both credit officers and clients have reported on the positive outcomes of this initiative.

Romania suffers from some of Eastern Europe's worst environmental problems at the time when the country is preparing its entry into the "environmentally-conscious" European Union planned for 2007. The banking sector can play a key role in the implementation of stricter environmental and social standards. The largest commercial bank in the country, Banca Comerciala Romana (BCR), must ensure that its environmental policies and procedures, as well as those of its corporate and SME borrowers, meet the environmental and Occupational Health & Safety requirements of local and national authorities. Given Romania's scheduled accession into the European Union, BCR's lending activities must also comply with EU requirements.

This is why IFC, through its Sustainable Financial Markets Facility, and the European Bank for Reconstruction and Development (EBRD) are providing crucial advisory support to BCR. Through a training program implemented by FIKonsult, an environmental training consultancy in the Czech Republic, IFC and EBRD have provided management and staff with the knowledge and tools necessary to conduct environmental and social risk assessments on BCR investments. The two-day workshops aim to provide: (i) the rationale underlying BCR's risk management policies, (ii) practical tools for risk management throughout the project cycle, (iii) case studies to demonstrate implementation across industries, and (iv) reassurance to bank staff of their capacity to implement the procedures.

By now, all of 600 credit officers have been trained. They reported an improvement in their basic environmental awareness; they also noted that, through their due diligence efforts, they are better able to understand and manage the risks that arise from their customers' business activities.

Customers have commented on the bank's willigness to provide financing to pursue environmental compliance. Furthermore, the bank has not only aided in clients' understanding of current and post-2007 environmental obligations, but it has also facilitated their relationships with environmental authorities.

With assistance from the IFC, EBRD, and FIKonsult, BCR has parlayed its environmental and social risk management program into a distinct competitive advantage. BCR reduces its risk profile through its management of a more creditworthy portfolio. By the same token, clients enhance their global competitiveness through improved social and environmental performance. Of course, this inventorying of benefits would not be complete without recognizing the ultimate benefactor – the environment itself.