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Honduras Creates New Unit to Oversee Sustainability and Responsible Banking

Tegucigalpa, Honduras - The National Commission of Banks and Insurance has established a new unit within the banking sector dedicated to promoting sustainability and responsible banking practices.

New Unit’s Responsibilities

The AS Unit or Responsible Officer is responsible for ensuring that financial institutions in Honduras comply with international standards for environmental and social risk management. This includes:

  • Preparing drafts of the AS Policy and Procedures Manuals for approval by the Board of Directors
  • Applying SARAS in credit granting and operation management, supporting other involved areas of the institution
  • Assessing SA risks, discussing and proposing SA management measures, and monitoring performance
  • Identifying training and dissemination needs for adequate risk management
  • Informing the level of whoever depends on the detection of possible deficiencies that occur in the application of policies, processes, and procedures related to SARAS
  • Performing AS evaluations in accordance with approved policy, procedures, and manuals
  • Implementing procedures to verify mitigation measures applied or implemented by clients and their documentary support
  • Other responsibilities deemed necessary by Senior Management for the development of its functions

Procedures Manual

The AS Procedures Manual, outlined in Article 14, must include provisions for:

  • Excluding high-risk projects from investment portfolios
  • Categorizing risks based on environmental and social factors
  • Conducting due diligence procedures
  • Determining decision-making authority levels
  • Implementing a monitoring system

Risk Categorization Methodology

Article 15 defines the risk categorization methodology, which takes into account factors such as:

  • Geographic location
  • Nature of activity
  • Context
  • Capacity
  • Organization
  • Commitment
  • Resources oriented towards AS performance established by clients

Annual Report

The unit will prepare an annual report on AS Risk management, outlined in Article 16, which will include information on:

  • Risk categorization
  • Relevant matters related to AS Risk
  • Impacts on portfolios during the last year
  • Results of complaints attended by clients
  • SARAS self-assessment

Integration into Credit and Operations Processes

Integration of SARAS into credit and operations processes is mandatory, as outlined in Article 17. This includes:

  • Integrating SA variables or criteria into the analysis phase
  • Granting and credit monitoring
  • Establishing prevention, mitigation, correction, or compensation measures for AS risks

Commitment to Sustainable Development

The creation of this new unit demonstrates Honduras’ commitment to promoting sustainable development and responsible banking practices in the country’s financial sector. The unit will work closely with financial institutions to ensure compliance with international standards and best practices for SA Risk management.

Contact Information

National Commission of Banks and Insurance Tegucigalpa, MDC Honduras

Source: National Commission of Banks and Insurance, Honduras.