Group Sustainable Development
Subject: Vedanta Resources Group
We would like to thank you for your extensive and detailed letter in which you express your concerns about the engagement between ABN AMRO and our client Vedanta Resources Group (Vedanta). The issues you have raised in your letter are also important to us, as we have indicated during the several (informal) conversations we have had in the last couple of months such as the NGO-meeting on India on June 7th, 2005.
In addressing your questions about the relationship with Vedanta we would like to inform you on the results of our meetings with the company after providing you with some background information on how we approach our clients (in the mining sector) in general.
ABN AMRO’s business approach
It is policy within ABN AMRO to conduct a financial review of all existing clients within our portfolio at least once a year. In addition to financial criteria we have incorporated environmental and social assessments into the review process for an increasing number of sectors, including the mining industry. Our Metals and Mining Policy applies to all mining clients, initially within the Strategic Business Unit Wholesale Clients only. For client engagements, we apply a client assessment tool, which rates the extent to which clients have processes and policies to address the environmental and social impacts of their business. For projects, the Equator Principles are applied to ensure that projects we finance are developed in a socially responsible manner and reflect sound environmental management practices. For single asset investments, we use a filter to assess whether there are any sensitive impacts associated with the transaction.
In deriving consequences from implementing the policies, where we ultimately aim for a ‘best practice’ approach, we take the reaction of a client into consideration. If an existing client is deemed to have an environmental and social performance that is below average, our first goal is to initiate a dialogue with the client to understand their commitment to raising standards. If the client has the commitment to improve, we will offer support to effect these improvements. Where a client shows no willingness to alter its policies and implementation, we will seek termination of the relationship.
Our engagement with Vedanta
In all our contacts, we have experienced Vedanta to be open and willing to discuss the various matters:
We sincerely trust we have updated you satisfactorily on the actions we have taken so far to address and to discuss your concerns with our client.
If you have any questions or remarks, please do not hesitate to contact us.