The guidelines were introduced to the bank’s shareholders at its AGM this week and are based on widely adopted international sustainable development standards adopted by stakeholders including the World Commission on Dams (WCD), as well as other industry participants, development agencies and NGOs.

The rules apply to “direct lending or other forms of project finance only, including corporate lending and other financial support where the use of proceeds is known to be project related.”

It covers water resource management, water services and infrastructure, but currently excludes water usage and other human activities that impact on water.

The rule means that HSBC will not provide assistance to any projects located in, or impacting on, critical natural habitats, sites on the Ramsar list of wetlands, UNESCO World Heritage Sites, and dams that do not conform to the WCD Framework.

Sir John Bond, Group Chairman HSBC Holdings, said freshwater conservation was the responsibility of businesses, governments and NGOs alike.

“By putting freshwater on the global agenda, we can all help support the World Summit on Sustainable Development in its efforts to cut the number of people without access to clean water and sanitation,” he said.

The initiative was praised by WWF. “The banking sector has a responsibility to ensure that appropriate social and environmental standards are applied to projects receiving investment,” said Robert Napier, Chief Executive of WWF-UK. “HSBC has taken steps to manage its business footprint with the involvement of WWF, by developing responsible lending practices.”

The conservation group pointed out that much more needed to be done to maintain freshwater supplies as more than one billion people currently lacked access to safe and sustainable drinking water supplies and freshwater habitats are being destroyed faster than forests and oceans.

By David Hopkins

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