Environmental Credit Risk Management in Banks and Financial Service Institutions

Olaf Weber

232 citations0/0 files storedBusiness Strategy and the Environment

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Sustainable Finance and Green Bonds Banking stability, regulation, efficiency Corporate Social Responsibility Reporting

Abstract

ABSTRACT How do Canadian banks integrate environmental risks into corporate lending and where are they located compared with their global peers? In this paper we report a mixed method analysis of the integration of environmental risks into the credit management. The qualitative and quantitative analyses suggest that all analyzed Canadian commercial banks, credit unions and Export Development Canada manage environmental risks in credit management to avoid financial risks. Some of the institutions even connect environmental and sustainability issues with their general business strategies. Compared with other countries, Canadian banks are best in class, as all six Canadian commercial banks, comprising over 90 percent of Canadian assets, systematically examine environmental risks for credits, loans and mortgages. We conclude that Canadian banks are proactive regarding environmental examinations of loans and that there is a need for a more accountancy related reporting on environmental risk management in financial institutions. Further research is needed to be able to calculate costs and benefits of integrating environmental and sustainability issues into the credit risk management. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.

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1999DOES STAKEHOLDER ORIENTATION MATTER? THE RELATIONSHIP BETWEEN STAKEHOLDER MANAGEMENT MODELS AND FIRM FINANCIAL PERFORMANCE.2010The impact of corporate social responsibility on the cost of bank loans 2010Sustainable entrepreneurship and sustainability innovation: categories and interactions 2011Nuevos modelos de negocios en los mercados emergentes 2010CSR and environmental responsibility: motives and pressures to adopt green management practices 1997Credit risk measurement: Developments over the last 20 years 2003The Blended Value Proposition: Integrating Social and Financial Returns 2009The Global Competitiveness Report 2009–2010

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