Our Approach to Environmental responsibility

Depending on one’s perspective, a bank could be said to have relatively little impact on the environment (based on its direct activities such as energy consumed) or a potentially enormous one (through the environmental consequences of the commercial and other activities of its customers).

While Commercial Bank has in place a number of procedures aimed on minimising its already modest direct impact on the environment, the main thrust of its environmental policy is at mitigating indirect impacts through the business and industrial activities it finances. The Bank does its best to ensure that the financing extended to its customers is used to set up and fund operations which are both sustainable and environmentally sound. This concern is at the heart of the Bank’s sustainability strategy.

The Social and Environmental Management System (SEMS), discussed earlier, provides the framework for policy, implementation and monitoring for all major activities undertaken not only by the Bank but also its customers.

Our Policy We are especially focused on ensuring that all major activities undertaken by the Bank are consistent with the applicable requirements of our Social and Environmental Management System (SEMS), which provides a policy framework, implementation system and a monitoring mechanism to ensure that the Bank conform to performance standards.

In particular, through SEMS we ensure that:

• All projects are reviewed against the stipulated environmental policy.
• All projects we finance are expected to be designed, built, operated and maintained in a manner consistent with the requirements of that policy.
• Decision makers at client firms understand and agree to operate within the policy commitments of the Bank.
• Transparency is maintained in all social and environment-related activities.

Organisational Responsibility, Training and Awareness

The designated Social and Environmental Coordinator assesses the social and environmental impacts and implications of the Bank’s operations and ensures that resources are made available for the efficient management of such issues. The Coordinator reports to the Head of Corporate Finance who signs off on the Bank’s annual Environmental Performance Report.

The Social and Environmental Coordinator ensures that all relevant procedures are implemented for every project undertaken, and that records of environmental reviews are maintained. This officer is trained and updated on a continuing basis on matters relevant to his or her purview. The Bank makes use of this expertise, augmented by external resource personnel when necessary, to instruct and mobilise the wider employee base of the Bank on environmental and other sustainability issues.

Implementation, Monitoring and Follow-Up

Bank employees visit projects identified for financing, assess and evaluate their environmental impact and assume responsibility for the mitigation of any adverse effects over the project period. The officers selected for this task are those with the necessary aptitude and training. External specialised assistance is also obtained when required.

Pre-emptive mitigation is also carried out when evaluating and granting industrial loans. Financing decisions are based on an appraisal of the prospective project, which includes social and environmental impact. The Bank may require changes to the project to bring it in line with the desired standards before financing is approved; if this is not possible, the Bank will decline financing.

Key Performance Indicators of Environmental Responsibility

A Greener Bank

In addition to the very important aspect of the social and environmental policy outlined above, Commercial Bank makes every effort to ensure that its own operations and activities are minimal in their environmental impact. The rules and procedures adopted in this regard are outlined below:

Waste Management

• Returning used IT equipments to its suppliers who follow environmental-friendly guidelines in disposing them as per international standards followed by their principals. During the year, the Bank received a certificate from a supplier confirming that they have disposed/recycled all e-waste returned by the Bank weighing approximately 150,218 kg according to the rules and regulations of the Environmental Authority of Hong Kong/China and Basel Convention.
• The Bank operates a waste-sorting system prior to disposal. Staff members have been advised to segregate waste, with separate colour-coded bins for paper, plastic and biodegradable materials.

• A paper-management system ensures that waste paper is recycled and reused wherever possible.
• Awareness programmes for staff promote the paperless office concept, discouraging the unnecessary printing of documents, e-mails, etc.
• Specific product lines are subsumed under a new system to reduce paper usage known as ‘green eco-friendly banking’. The products and service on offer are: online banking, mobile banking, e-Exchange, Paymaster, Oracle e-Business Suite and the Bank's intranet.

Energy Management

• The Bank encourages customers to adopt energy-efficient practices in their businesses by providing loans for such purposes. The Bank also carries out training programmes on this subject through its E-Friends refinance scheme.
• The Bank’s own buildings use environment-friendly technologies wherever possible. Among these are variable air volume units to control temperature, ventilation systems with energy-saving features, etc. Air-conditioning use at the Head Office and branches is limited to normal working hours.

Green IT Initiatives:

• Server virtualisation: During 2011, a total of 31 servers were merged into 2 servers by using server virtualisation. This resulted in more efficient use of floor space and reduction in materials due to the lesser number of servers used.
• 50 ATMs are procured from suppliers who comply with energy ratings and which are ROHS (Restrictions on Hazardous Substances) compliant.

Water Management

As part of its water management efforts, the Bank attempts to minimise waste and recycle waste water at its Head Office. The Head Office relies mainly on groundwater resources in order to reduce its dependence on the national water supply system.

Environmental Protection

As the Bank expands its presence, we ensure that only approved tracts of land are acquired ensuring that our activities do not upset the equilibrium of the eco-sphere and its attendant biodiversity. Please refer the Section on ‘Impact on Performance Due to Climate Change’ for the Bank’s strategies, current position and future plans towards minimising impacts on biodiversity.

Products and Services

The Bank’s ‘green loans’ provide concessionary funding for entrepreneurs who adopt environment-friendly technologies, and ensure that clients obtain necessary environmental clearances as and when required. Qualification for lending could include the conduct of an environmental impact assessment of the project. Staff members are instructed to check on clients’ compliance with these requirements during the annual credit review.

Fines and Sanctions

The Bank has not been involved in, nor been party to, any instance of non-compliance with environmental standards; thus, it was not called upon to pay fines or accept any non-monetary sanctions for non-compliance with environmental laws and regulations.

The following Reports included in the Annual Report provides assurance in this regard:

	Page
Annual Report of the Board of Directors	238
Statement of Directors’ Responsibility	239
Managing Director’s and Chief Financial Officer’s Responsibility Statement	242

However, there are pending legal actions initiated against the Bank, none of which are environmentally- related. The Bank did not make any provision for these actions filed against the Bank as we are of the view that the possibility of occurrence of a claim is remote as advised by our lawyers. The details on ‘Litigation against the Bank’ are given in Note 37 to the Financial Statements.

Future Outlook

• The Bank intends to subsume new products under the ‘green eco-friendly banking’ scheme. We plan to introduce electronic statements for current and credit card accounts. Moves are also being made to increase the online conduct of transaction among staff members.
• Continue on server virtualisation and other green IT initiatives in order to accrue the desired benefits.
• Development of online loan approval to minimise paper work.
• Explore the possibilities of sending e-statement to customers.
• Energy rating to be included as a selection criterion when procuring IT equipment.
• Explore the possibilities of reporting the performance-related indicators on energy, water, carbon and waste in future reports.