SIGWATCH’s NGO campaign tracking data helps the bank screen its commercial and prospective clients for social and environmental risk, thus protecting the environment and its communities.
BACKGROUND
One of the world's leading banks, it serves one in three American households and more than 10% of all middle-market companies and small businesses in the United States. Headquartered in the U.S, it provides banking, investment and mortgage products and services, as well as consumer and commercial finance.
BUSINESS REQUIREMENT
As part of its commitment to consider the environmental and social impacts of its lending and investment activity in addition to traditional financial risk, the bank makes a point of conducting ESG due diligence on its existing and prospective commercial clients. For the past four years, SIGWATCH has been one of the tools it relies on for this process.
Having the NGO view is important, says Environmental and Social Risk consultants, because NGOs “carry a significant voice in the environmental, social and human rights communities
SOLUTION AT A GLANCE
SIGWATCH has become an integral part of the firm's due diligence process. It is used by the bank’s Environmental and Social Impact Management department to provide a unique NGO perspective on current and prospective clients.
The bank also uses SIGWATCH to monitor NGO actions and issues related to its own business, as part of its reputation risk programme – something it intends to expand on in the future.
SOLUTION IN ACTION
The Environmental and Social Impact Management Team performs due diligence across a handful of “sensitive” industry sectors: oil and gas, arms and defence, mining and consumer finance. It assesses clients at the onboarding stage and carries out annual reviews thereafter, ensuring that clients comply with the bank’s Environmental and Social Risk Management (ESRM) policy.
With SIGWATCH, the team is able to build up a picture of the environmental and social risks posed by a company. The NGO data is fed into internal ESG impact ranking system and companies ranked as ‘critical’ or ‘high’ are escalated for further investigation (enhanced due diligence). Besides helping assess its third-party risk, SIGWATCH daily alerts keep the bank informed of emerging issues that may impact its business in the future, and which may need to be incorporated in its ESRM policy.
RESULTS
Identifying and demonstrating risk
SIGWATCH not only supports the client due diligence process, protecting the bank from potential risk, it also provides credible data that can be used to demonstrate risk to internal stakeholders.
“SIGWATCH is a good source to show that NGOs are watching us and watching our clients, and we definitely need to be aware of the issues they are bringing up.”
Forecasting risk, protecting reputation
Crucially, by providing an early warning of issues coming down the line, SIGWATCH enables the bank to tighten its defences against related risks. For example, SIGWATCH data showing that palm oil was rising up the NGO agenda prompted them to take a closer look at its potential client exposure. It is currently in the process of adding palm oil to its ESRM policy.
Informing corporate strategy
Looking ahead, the bank believes there can be even greater use of SIGWATCH’s capabilities in the future.
“The next opportunity is to use more of SIGWATCH’s data analytics services to understand trending issues over time, and present this information to our senior leaders,” . “This will help open their eyes to the NGOs who are targeting Wells Fargo most, and on which issues.”
In this way, SIGWATCH looks set to expand its role at the bank, from a critical due diligence tool to a valuable resource that is “more impactful for the broader company strategy as well”
