Phase IV
Governance and Sustainable Development

INTRODUCTION

Corporate Governance for Sustainability of DFIs is Phase IV of ADFIAP’s “Corporate Governance for DFIs” project. It is a 12-month capacity-building program made possible through a funding support from the Center for International Private Enterprise (CIPE), for member-development banks of ADFIAP. The objective is to develop a “governance-sustainable development framework” for banks and financial institutions in the Asia-Pacific region by incorporating sustainable development and good governance practices into their investing, lending, and other business activities.

The project period was from July 1, 2006 to July 31, 2007.

BACKGROUND INFORMATION

ADFIAP’s ‘Corporate Governance for DFIs’ Project is the Association’s response to the growing need of its member-development finance institutions (DFIs) in the Asia-Pacific region for the implementation of good corporate governance policies and practices in their respective institutions by learning from experiences of fellow members as well as from those in other parts of the world.

In many countries in Asia and the Pacific, governments moved for comprehensive reforms in corporate, banking and capital markets regulations. They have laid down new legal and regulatory frameworks, but enforcement compliance is expectedly a slow process.

Development banks, which are specialized government-owned financial institutions, have a critical role to play in the country’s financial system and, consequently, in the national development agenda. It is because of this public nature of their organizational function and mandate and the fact that they deal with the private sector in the provision of long-term capital that development banks need to take the lead in the above-mentioned reforms.

Over the past decade, focus has been increasing from the outside – whether from governments, foreign investors, or multilateral development institutions – on issues related to increased accountability, transparency, and disclosure in corporate governance systems. Of late, however, corporate governance is at a crossroads. Many developing and emerging economies already recognize that good corporate governance is crucial for sustainable economic development. And many are searching for a new or “right” model to apply to their specific domestic environment.

It is in this light that this project has been conceived – to inject the value of corporate governance for sustainability – as a special ingredient in model formulation for the region.

The need remains for the government, civil society and business firms to be convinced that good corporate governance is truly in their best interests. Good corporate governance expands potential markets, broadens ownership, creates alternate financing options, and – most importantly – will help reduce poverty.

PROJECT ACTIVITIES

Based on the grant document, the project has undertaken the following activities:

1. A research study that provided a review of corporate governance reform in the development finance sector as well as an analysis of players and networks that have the potential to drive sustainable production and consumption.
   
   The data gather were made as basis in developing a “sustainability model” in driving sustainable consumption and production forward in development banks and other financial institutions including commercial banks.



2. A 5-day Regional Seminar-Workshop on Strengthening Governance for Sustainability in DFIs was held in Manila, Philippines on February 12-16, 2007. Seventeen (17) mid-to-senior level officers of ADFIAP member-banks and other financial institutions from Cambodia, Nepal, Pakistan, Federated States of Micronesia, Malaysia, and the Philippines attended the program.
   
   The regional program tackled governance structures at the interfaces of sustainable production and consumption (market governance). Among the salient topics discussed were: corporate governance basics (viewpoints, elements, principles, mechanisms and control, CG scorecards, etc.); role of corporate governance in sustainable development; dimensions of sustainable development (environment, social, economic); CSR and SD practices; policy implementation; sustainable microfinance.
   
   The participants, who became “point-persons” and have later acted as training facilitators and/or resource persons when ADFIAP subsequently held the four national programs, were able to accomplish CSR sustainable development projects for their respective institutions putting considerable emphasis on the elements of sound CSR/SC program; and supporting resources, timetable and corporate governance policy and process that will ensure its success.
   
   The foregoing output has shown that the program successfully attained its objective of developing a national model on corporate governance for sustainability in DFIs in Asia and the Pacific.



3. National seminar-workshops were held in member-countries with four (4) geographic target groups to adapt the regional experience into local contexts, adjusting it to address unique issues financial institutions may face in each country. These were held in the following countries:
   
   
   • Hanoi, Vietnam on May 7-9, 2007. Two programs were held in this country; one for the Vietnamese Group with 44 participants attending; the other, for the Pacific Islands Group – 20 participants, including CEOs of financial institutions coming from other regions. Both events were collaborated by the Vietnam Development Bank (VDB) and ADFIP (Association of Development Financing Institutions in the Pacific).
   • Mumbai, India – June 7-8, 2007 in cooperation with the IDBI Bank Ltd. 20 participants from difference financial institutions in India attended the program.
   • Kuala Lumpur, Malaysia – June 12-13, 2007 in cooperation with the Association of Development Finance Institutions of Malaysia (ADFIM). 32 participants from ADFIM member-institutions attended the program.
     
     In each host country event, a local speaker was invited to present the country’s Agenda 21. The participants were made aware and appreciate the country’s key programs and projects, highlighting the roles and responsibilities of the banks and financial institutions towards contributing to sustainable development.
     
     

     

     ADFIAP Secretary-General Mr. O.B.Peralta addressing the seminar in Hanoi, Vietnam »

     The foregoing national events also addressed the issues raised in the regional workshop on how corporate governance can be a deterrent against corruption and unethical behavior. The attendance of key financial institutions in each location created a wider understanding and appreciation of the importance of corporate governance with sustainability linkages through their credit, lending, and other corporate activities. They have committed to push forward and adopt sustainable development initiatives in their respective institutions and improve the institutional framework and practices of corporate governance in support of economic growth.



4. Publication of Training Manual
   
   The publication of 500 copies of training manual to provide adequate learning opportunities and training tools for banks and other financial institutions in Asia and the Pacific region, were also undertaken under the project. The training packs will be distributed to all ADFIAP member-institutions, partners and other network associated worldwide to create a wider understanding and appreciation of the need to strengthening good corporate governance ensuring that corporate governance reforms do not dampen entrepreneurship, but rather enhance economic development in a more transparent and accountable manner.

ACKNOWLEDGMENT

ADFIAP gratefully acknowledges the funding support of CIPE as well as to its insightful interaction with CIPE officers and staff, namely, its Executive Director, Dr. John D. Sullivan; its Senior Program Officer for Asia, Mr. John Callebaut and its Program Assistant, Ms. Katie Creel (formerly, Ms. Elizabeth Hallinan).

Our appreciation also goes to all ADFIAP member-banks who participated in the program as well as those members who have provided resources for the conduct of the training events under the project. Their continuous support has enabled ADFIAP to carry out its development mission.

Acknowledgment of appreciation is also in order for the ADFIAP Secretariat team in Manila who managed and coordinated the project activities. The team consists of Sandra Honrado, Sandy Lim, Susan Bajar, Lorina Cervantes, Robert Juan, Liza Olvina, Rey Lazo, Tinette Arenas, Jordan Isidro and Ricky Blanca. The team is headed by the ADFIAP Secretary-General, Octavio B. Peralta.

Finally, ADFIAP is grateful for the support and wisdom of Dr. Cesar Saldaña, Founding Fellow of the Institute of Corporate Directors in the Philippines, and to Dr. Theta Ponce, who provided ADFIAP with the conceptual framework in developing and formulating the training pack and worked with the ADFIAP staff as well as its member-banks in all the training events conducted under the project.