Social Safeguards in lending

As a bank committed to progress of this country and a partner to sustainable development, the Development Bank of the Philippines (DBP) since 1997, adopted an environmental policy to align with our vow to protect the environment. This was reinforced in 2002 when we were recognized as the first Philippine bank to be ISO 14001-certified. In the past years, this policy has been encapsulated in our very own Integrated Management System Manual. Today, we want to pioneer the Social Safeguard Policy for our homeland.

What does Social Safeguard mean? For World Bank, “It serves as a cornerstone of its support to sustainable poverty reduction. Their objective for these policies is to prevent and mitigate undue harm to people in the development process.” For Asian Development Bank, “It builds upon the three previous safeguard policies on the environment, involuntary resettlement and indigenous peoples, and brings them into one single policy that enhances consistency and coherence, and more comprehensively addresses environmental and social impacts and risks.” For us, it required reflecting on emerging practices and determining how best to incorporate them in our processes. It is more than simple compliance with specific national laws as well as requirements of international development partners which include Sustainable Development Goals. It is a commitment to more enlightened world view which affirms the objectives of promoting long-term sustainability of projects by assessing their potential affects on the three pillars of sustainability – environmental (planet), social (people), and economic (profits).

Why is there a need for a Social Safeguard Policy? Development projects have the potential of causing negative environmental and social impacts. As the country’s premier development bank, we realize the need to identify, assess, mitigate social risks and prevent adverse affects of projects in a socially responsible manner. The Social Safeguards Policy aims to address risk relative to social aspects or minimize problems on the environment and local communities, comply with national laws and regulations, and benchmark of DBP practices to guidelines adopted by international funders, partners, and rating agencies. Therefore, this policy shall apply to all project loans, advisory services and non-credit programs and services to be financed by our bank.

As part of our Social Safeguards Policy statement, we shall:

1.Make the identification of social impacts and risks a part of the normal process of risk management and assessment through the technical due diligence process of the bank;

2.Comply with local, national and international regulations and conventions applicable to social considerations of projects, including indigenous peoples, gender and development, child welfare, and occupational/community health and safety issues

3.Take an active role in influencing our clients, business associates, bank officers and staff to integrate social considerations into their project operations

4.Define performance measures for social impact and conduct monitoring and evaluation activities to measure performance against goals

There are existing laws that should be incorporated in the social considerations of projects:

R.A. 9874, An Act to facilitate the acquisition of Right of Way, Site or Location for National Government Infrastructure Projects. Common issues that arise: relocation or loss of shelter, loss of assets, loss of source of livelihood. It is our aim to avoid or it is unavoidable, to minimize displacement by exploring alternative project designs.

R.A. 8371, the Indigenous Peoples Right Act of 1997. Since Indigenous Peoples have set of specific rights based on their historical ties to a particular territory, and their cultural or historical distinctiveness from other populations, we must ensure that the development process fosters full respect of human rights, dignity, aspirations, culture and natural resource-based livelihoods of the indigenous.

R.A. 10066, the National Cultural Heritage Act of 2009. This includes archaeological, historical, and cultural and religious heritage sites to which must be protected from adverse impacts of project activities and support its preservation.

Executive Order No. 273 (Approval/Adoption of Philippines Plan for Gender-Responsive Development 1996-2025).To give equal treatment to both genders in terms of economic, social and political change by assessing the needs and barriers to economic opportunities as well as to use information as a basis in selecting, designing and implementing projects that is beneficial to both sexes.

PD 442, The Labor Code of the Philippines (Book III, conditions of Employment). This includes decent employment opportunities and enhancing social protection (working conditions and the employment-management relationship).

1987 Philippine Constitution – Art. II, Section 15. It covers the potential exposure of communities to project risks such as accidents, diseases, unscrupulous persons or both from routine and non-routine circumstances.

These are just a few of the legislation references that we reviewed and would like to always consider in every project we finance.

The process adds a little bit of cost to the way business is done, but it is a price that pays for itself in the long run from the country perspective. It is every citizen’s duty to ensure social safety despite the progress we all aim. While change is inevitable and progress is part of it, we can only consider our country progressive if we protect our environment, the human rights and our culture and do not allow prejudices to hinder development. Our advocacy is to get the whole banking community to buy into this sphere, so that finance leads the way in building a society that is just, fair and truly inclusive.

*** (Benel D. Lagua is Executive Vice President at the Development Bank of the Philippines. He is an active FINEX member and a long time advocate of risk-based lending for SMEs. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.) benel_dba@ yahoo.com