HSBC's Green defends Samling backing

London, 31 May: HSBC chairman Stephen Green has defended his bank's role in the listing of Malaysian forestry company Samling, which some NGOs claim operates in breach of HSBC's environmental lending guidelines.

Speaking at the launch of HSBC's $100 million climate initiative yesterday, Green said that the company is "on a journey in the right direction towards environmental sustainability".

"We've banked for them for 60 years. I know the CEO. We've seen the areas in which they operate. We're confident that they are moving forward … and it's our obligation to work with them," Green told reporters at HSBC headquarters in London.

"Would we stop doing business with them if we weren't confident? Yes," he added, noting that HSBC has severed relationships with some of its clients over their environmental policies, without naming any specific examples.

In March, NGO Global Witness accused HSBC of breaching its own forestry sector sustainability guidelines by arranging a Hong Kong stock exchange listing for Samling. HSBC was joint arranger of the deal with Credit Suisse and Macquarie Securities.

HSBC's forestry sector guidelines says the bank will not provide financial assistance to commercial logging operations in primary tropical moist forest and high conservation value forest. It prefers to deal with clients who are certified by the Forestry Stewardship Council (FSC), but is prepared to work with customers that are "following a credible path towards achieving compliance".

According to Global Witness, Samling is heavily involved in logging tropical moist forest in Guyana, Papua New Guinea and Malaysia, and a subsidiary, Barama had its FSC certification suspended in January after an audit found that the company had failed to conduct appropriate environmental impact assessments, did not have a forest management plan, and was logging lands without the free and informed consent of local people.

At the time, HSBC declined to comment, citing client confidentiality. Francis Sullivan, HSBC's deputy head of group sustainable development, yesterday told Environmental Finance that a 40-day quiet period following the listing had prevented the bank defending its decision (see Environmental Finance, April 2007, page 11).

He noted that the bank's forestry policy "never said [our clients] have to be completely sustainable, or we're out … there has to be a decision which are on a journey towards achieving compliance and which aren't".

"High level decisions are ongoing" between the bank and company management, he added, without elaborating.

Green was speaking at the launch of HSBC's climate partnership, which will see the bank give $100 million in grants to four NGOs – which it says is the largest ever corporate donation by a UK company.

The Climate Group, Earthwatch, the Smithsonian Institute and WWF will use the money for a range of research, education and conservation and leadership programmes designed to combat climate change. The initiative will be covered in the forthcoming June print issue of Environmental Finance magazine.