Responsible Lending

At FirstBank, we consider effective risk management to be of utmost importance to its overall operations. Accordingly, the Group has put in place a robust risk management framework that clearly monitors, evaluates and manages the principal risks it assumes in conducting its activities.

Our risk management is guided by our key elements philosophy which includes a holistic and integrated approach in bringing all risks together under a limited number of oversight functions but with responsibility for managing risks existing from the Board of Directors and executive committees to each business manager and risk owner. Each risk officer is empowered to perform their duties professionally and independently in line with well-defined policies and structures that are clearly communicated across the Bank to achieve and maintain a conservative balance between risk and revenue considerations.

Part of the Bank’s commitment to driving sustainability involves managing sustainability risks. The sustainability risks associated with lending include financial risks, legal risks and reputational risks. Financial risks involve inability of customers to repay their loans due to environmental and social costs. Legal risks include potential direct liability for the subsidiary to pay for clean-up of contamination caused by a customer through possession of assets. And reputational risks include the damage to reputation as a result of association with polluting or exploitative and unethical customers.

To manage these risks, FirstBank has taken a structured approach to the ongoing process of embedding sustainability. As it has taken important steps to build on the existing environmental screening process and make a more comprehensive mechanism involving the environmental, social and governance management system (ESGMS).

The ESGMS consists of environmental, social and governance policy, procedures to screen transactions; guidance for monitoring performance and maintaining ESGMS records; ways of reviewing ESGMS and continuously improve it based upon changing international standards, the company’s lending profile; considerations with regard to internal and external reporting of ESGMS performance; roles and responsibilities for implementation as well as budget, training and senior management approval.