Toolkits

Corporate Governance for Sustainability Program (CG4SP) for Development Banks in Asia and the Pacific: A Training Guide

ADFIAP’s sustainable development mission is anchored on its belief that sustainable development cannot be achieved without good governance. The CIPE-funded project entitled, “Corporate Governance for Sustainability Program (CG4SP) for Development Banks in Asia and the Pacific”, is thus a manifestation of the Association’s desire to provide a clear link between sustainable development and corporate governance.

This CG4SP project is the fourth of a series of programs under ADFIAP’s “DFIs for Corporate Governance” agenda which is the Association’s response to the growing need of its member-development finance institutions (DFIs) in the Asia-Pacific region for the implementation of good corporate governance policies and practices in their respective institutions by learning from experiences of co-members as well as from those in other parts of the world. The project is being supported by the Washington D. C.-based Center for International Private Enterprise (CIPE). More information on the project is at www.governance-asia.com

The CG4SP project is a capacity-building program for member-development banks of ADFIAP that aim to institutionalize good corporate governance for sustainability practices in their respective organizations.

The objectives of the CG4SP are to: (a) enrich corporate governance reforms in the development finance sector in the region by achieving a better understanding of governance policies and structures as they interface with sustainable development issues; (b) improve the institutional framework of corporate governance reforms by ensuring that they enhance economic development in a more transparent and accountable fashion; (c) support research that has the potential to drive sustainable development forward; and (d) disseminate CG4SP materials in member-DFIs and their stakeholders.

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Corporate Governance Rating System

The Asian financial crisis of 1997 not only stressed the need for corporate reform in the business community but also brought the need for reform within national development finance institutions (DFIs).

Set up by their governments as specialized financial institutions, DFIs provide long-term financing and technical assistance to enterprises that contribute to the country’s economic development and growth but which are inadequately supported by other financial institutions during their formative years. Thus, DFIs have an important role in a country’s development and are an integral part of its financial system.

DFIs also play a central role in advancing corporate reforms in the region. Unlike regular commercial banks, development banks not only provide financial assistance to enterprises, but they are also involved in training and providing management expertise. Thus, to be effective in promoting good corporate governance they must institute good corporate governance practices themselves.

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Resource & Trainers’ Guidebook, Environmental Risk Scan

Banks are in the business of taking risks. Consequently, managing these risks is the bank’s first and foremost task. This resource book, however, focuses on environmental risks, among other risks that a bank is confronted with in its lending decisions. The book also provides a methodology that is contextual to a development finance institution (DFI). But banks and other financial institutions may find this book useful to them as well.

With the issue of the environment hugging today’s headlines and the concomitant pressure coming from almost all sectors to do something on environmental concerns, there is now, more than ever, no argument whether DFIs and their borrower-clients should be responsible for the environmental consequences of their actions. The degree of responsibility to take may however vary, and in fact, may be minimal in some cases. But the DFI should start, one way or the other, to fulfill basic responsibilities of mitigating environmental risks in its transactions and go further over time with greater impetus on overall environmental governance in its organization.

Each DFI has its own guiding principles and approach to environmental risk management (ERM). But two things seem to emerge though, at least based on the experience of the Project Team during its conduct of a series of workshops in the Asia-Pacific region: (a) that ERM is a function of prevailing national environmental regulations, and (b) that it is the responsibility of the lending officer to see to it that the DFI and the client comply with the minimum requirement of these regulations.

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The Proactive Compliance Officers Manual

The development of this Proactive Compliance Officer Manual was part and parcel of Phase III of ADFIAP’s “DFIs for Corporate Governance” Project entitled, “Compliance Officership Program: Institutionalizing Corporate Governance Improvement Practices in Development Banks in Asia and the Pacific”.

The Compliance Officership Program (COP) is a 12-month capacity-building program for member-development banks of ADFIAP that aims to enhance good corporate governance practices in their respective organizations. The Compliance Officer (CO) was deemed as the focal person of the corporate governance improvement programs of the bank.

The project entailed the implementation of the following activities:

  • One (1) regional workshop to equip the COs with new tools and best practices on the subject and to allow for an exchange of experiences among participating member-banks.
  • Four (4) national workshops to adapt the above regional experience into a more homogenous and ‘local’ context.
  • Publication of a Compliance Officers manual.

The regional training event was held in Manila, Philippines on December 12-16, 2005 with 17 participants from as many countries attending. It was followed by a national workshop in Hyderabad, India on February 2-4, 2006. Seventeen participants from various Indian financial institutions benefited from the event. ADFIAP collaborated with the Jawaharlal Nehru Institute for Development Banking (JINDB) in organizing this program.

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Trainer’s Guide Book, Internal Environmental Management System (IEMS)

The contents of this trainers’ guidebook are based on the IEMS Resource Book, which includes references, case studies, handouts, among other things, that can be used by the trainer in conducting the training sessions. The slides here are for visual reference only, and the actual powerpoint presentations are in the CD-ROM that comes with this guidebook. You may modify the suggested presentation slides to suit your own requirements and local context.

This guidebook provides only for nine training modules covering the aspects of the business case, policy formulation and prioritisation and the performance areas (please see the diagram on the previous page). For the three remaining aspects (i.e., reviewing progress, internal and external communication, and getting recognition), the accompanying IEMS Resource Book has ample information and presentation materials for the trainer to use in the development of training sessions concerning these areas.

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