Vendor and supplier code of conduct and risk assessment to help achieve SDGs

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Ghana Sustainable Banking Principles: CBG CODE OF
CONDUCT FOR VENDORS AND SUPPLIERS
May, 2023

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The Concept of Sustainability
Background to Sustainability
Why ESG Is Critical For Financial
Institutions?
CBG Conduct
The Way Forward
Environmental, Social & Governance
(ESG) defined
The Ghana Sustainable Banking
Principles (GSBPs)
Case Studies: ESG Cases
Why the Code of Conduct
Conclusion
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PRESENTATION OUTLINE

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Sustainable Banking?
”Sustainability is being able to produce
what we need today without compromising
the ability of future generations to meet
their own need” –
Brundtland Commission, 1987
Sustainable Banking is an integration of sustainability
(environmental, social and governance (ESG) considerations)
best practices in a bank’s business activities and internal
operations (Bank of Ghana)
Sustainable banking implies carrying out banking operational
and business activities, with conscious consideration for the
environmental and social impacts of those activities (Deloitte).
Sustainable banking involves strategic planning and
execution of banking operations and business activities
while taking into consideration the environmental, social
and governance (ESG) impact (Infosys BPM).

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o The risk of causing pollution or
destruction of the natural
environment (land, water, air, natural
habitat, animals/plants) either
through accidental or deliberate
action which is either reversible or
irreversible.
Environmental
risk
o The risk when an organizational
behavior or action of others in its
operating environment, create
vulnerabilities, which stakeholders
might identify and apply pressure
on, in order to change such
behavior.
o Social issues may emerge in the
workplace, a client’s/investee’s
operations and may also impact
surrounding communities.
Social risk
o The risks related to an organization’s ethical and legal management, the
accountability, transparency and accuracy of company performance, and
involvement in other ESG initiatives important to stakeholders. E.g. Audit
committee structure, bribery and corruption, whistle blowing policy etc
Governance
risk:
Environmental, Social & Governance (ESG)

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Sustainability = ESG

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Background to Sustainability

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The Mandate of the GSBP
 Develop Five (5) Sector Specific Guidance Notes (Agriculture & Forestry; Construction & Real Estate;
Manufacturing; Oil & Gas and Mining; and Power & Energy)
Coverage
 Internal (Bank’s Internal Operations)
 External (Customers and Third Parties)

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Why ESG?
• Banks stand to play a major role in achieving the United Nations’ Sustainable Development
Goals (SDG).
• Opportunities for Banks and financial institutions to support the quest for net-zero with finance
offers, loans and investment schemes for green projects, thus lending a hand to individuals and
companies that are treading the path to sustainable development
• Banks play a crucial role in allocating financial resources; hence can integrate economic,
environmental and social factors to mitigate the rate of environmental pollution, economic
imbalance and social inequality.
• Ability to positively influence societies in which we operate.
• As a bank, it has credit risk, reputational risk and liability risk implication through businesses
with finance

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Credit Risk
 Client is not able to repay the loan on account of non-compliance to operating permits, social and environmentalissues
• Escalation of project costs (e.g. delays, additional investments)
•Fines/penalties from regulators due to non-compliance with national laws and E&S requirements
•Loss of production capacity (e.g. closure ofbusiness)
•Increased insurancecosts
Reputational
Risk
 Negative aspects of a project harm a financial institution'simage
• Media coverage
• Local resistance/consumercampaigns
• Governmental investigations
Liability Risk
 The FI faces legal liability complications
• Direct liability in the case of strict lender liability
• Class action suits if made responsible for negativeimpacts
• Obtaining ownership of contaminated collateral
Why ESG?

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Case Studies

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PURPOSE
• To sets the conduct standards CBG expects from its suppliers across three areas:
 supplier conduct towards their employees,
 the environment,
 and bribery and corruption.
• Set disclosure and reporting requirements which suppliers must fulfil prior to and during their engagements with
CBG.
RELATED POLICIES:
• CBG Anti-Bribery and Corruption policy
• CBG Gift and Entertainment Policy
• CBG Environmental and Social Risk Management Policy
• CBG Environmental and Social Risk Management Procedure Manual
EXCLUSION:
The code applies to vendors and suppliers who hold contracts with CBG, whether
they are contracted via representatives. The definition of contracts for purposes of this policy does not include
invoices for once off supplies.
CBG CODE OF CONDUCT FOR VENDORS AND SUPPLIERS

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Vendors &
Suppliers
Conduct
towards their
Employees
Vendors and
Suppliers
Conduct
towards the
Environment
Vendors and
Suppliers
Conduct relating
to Bribery and
Corruption
Vendor and
Supplier
Disclosure and
Reporting
Requirements
CBG Vendors & Suppliers conduct
provisions

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WHY THE CODE OF CONDUCT?
Per the Sustainable Banking Principles, Banks are required to develop
an Internal Sustainability Strategy
Communicate the relevant elements of the Internal
Sustainability Strategy to vendors/suppliers
Where appropriate, a bank should encourage or
require suppliers to demonstrate adherence to
relevant standards such as
• those around labour rights as well as those
around minimum health and safety and
environmental standards.
• If possible, a bank should introduce a sustainable
procurement strategy which involves screening
new vendors and periodically reviewing current
vendors with respect to their labour, health and
safety and environmental standards.
Manage Vendor Risk
What is Vendor Risk?
Vendor risk management
includes lessening risks of
poor data security and
cybersecurity failures,
regulatory violations, and
business interruption or
disruption from supplier failure
or significant supply chain
delivery delays.

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STRATEGIC RISK:
Occurs when a
prospective or
current vendor's
decisions and actions
are incompatible with
your organization's
strategic objective
OPERATION RISK
risk of loss resulting
from a vendor's
ineffective or failed
internal processes,
people, controls, or
systems
BUSINESS
CONTINUITY RISK
occurs when an
outside event
negatively impacts a
third-party vendor's
ability to conduct
business and impacts
your organization as a
result
COMPLIANCE AND
REGULATORY RISK
arises from a third-
party vendor's failure
to comply with laws
and regulations
governing the
products and services
to its customers.
INFORMATION
SECURITY RISK
stems from third-
party vendor security
vulnerabilities. Two of
the most common
cyber risks resulting
from missing or
ineffective controls
are cyberattacks and
data breaches
VENDOR RISK MANAGEMENT

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FINANCIAL AND CREDIT RISK
risk directly relates to the
financial condition of the third
party itself and its inability to
meet their contractual
obligations and provide
products and services to your
organization.
REPUTATIONAL
RISK
This risk covers a
variety of ways in
which your third-
party vendor could
directly or indirectly
damage your
reputation, brand,
or name
CONCENTRATION RISK
This risk is closely related
to business continuity risk.
It usually occurs when one
vendor provides too many
high-risk or critical
services or when only one
vendor in the marketplace
provides critical products
and services. This is also
known as a single point of
failure risk
GEO – POLITICAL
RISK
This risk can
occur when your
vendor is located
in a country or
region
vulnerable to
political unrest,
corruption, or
human rights
violations
ESG
(ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE) RISK
These risks occur
when vendors violate
environmental laws,
treat people unfairly,
or display poor
corporate
governance and
behavior

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The Way Forward – Vendor Screening
Existing Assessment questionnaire adequately addresses the ff:
• Screening of Vendor on Bribery & Corruption Conduct
• Review of the Vendor Risk Assessment Form accurately captures this conduct
• Sub-contractor (Section 5.2, 5.3, 5.4- Vendor’s 3rd parties compliance to anti
bribery/corruption policies)
• Violations of anti-bribery laws (Section 6.1, 6.3. 6.5, 6.7, 6.9)
• Screening of Vendor on Disclosure & Reporting
• Screening on Information security, privacy, business continuity, data
security

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The Way Forward – Vendor Screening
Gap identified
• Screening of Vendor on Environmental Conduct:
• Vendors and Suppliers must:
• Ensure compliance with all applicable environmental legislation
• Ensure the management of air and water quality as per local regulations or permit
requirements
• Encourage the efficient use of natural resources such as water and energy; and
• Reduce the generation of waste, promote recycling of materials, and ensure the
responsible management of hazardous substance
Examples of screening questions
• Does vendor have an Environmental policy/Management plan/EIA? in line Environmental
Assessment Regulations 1999, LI 1652 (where applicable)
• Does vendor comply with EPA regulations (i.e. EPA Permit)?
• Has the company designated an EHS Officers/department to manage Environmental & Social Risk
issues?
• Does the company have Green strategies to reduce, reuse and recycle product and other wastes?

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The Way Forward – Vendor Screening
Gap identified
Screening of Vendor on Social Conduct:
The expectation of CBG with respect to Vendors and Suppliers conduct towards their Employees is to:
• Create a fair and ethical workplace
• Treat their Employees with dignity and respect
• Ensure that their Employees can report workplace grievances and complaints anonymously, and
offer whistle-blower protection
• Ensure a workplace that is free of harassment and abuse
• Create a safe and healthy workplace environment
• Ensure fair wages and benefits for their Employees
Documents to review and examples of questions: (On-boarding)
• Content of their Human Resource Policies
• Content of Occupational Health and Safety Policy (Vendor with five or more employees) - (OHS Labour
Act 2003, Section 118). ILO laws on health and safety says every business must have OHS policy
• Evidence of payment of employees’ contributions, salaries and benefit (SSNIT, etc)
• Periodic review of clients ESG performance (evidenced by trainings, injury records etc)

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