Environmental & Social Risk Management in Banks - UNEP Finance ...
Environmental & Social Risk Management in Banks - UNEP Finance ...
Environmental & Social Risk Management in Banks - UNEP Finance ...
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<strong>Risk</strong>s for <strong>Banks</strong><br />
F<strong>in</strong>ancial<br />
Legal<br />
Reputation<br />
•• Inability Inabilitytoto make make<br />
repayments repaymentsdue duetoto<br />
environmental environmentalcosts<br />
costs<br />
•• Loss Lossof ofvalue valueof<br />
of<br />
collateral/assets collateral/assetsas asa<br />
result resultof ofcontam<strong>in</strong>ation<br />
or ornon-compliance<br />
•• Potential Potentialdirect directliability liabilityfor<br />
for<br />
bank bank (to (topay payfor forclean-up<br />
of ofcontam<strong>in</strong>ation contam<strong>in</strong>ationcaused<br />
caused<br />
by bya customer) customer) through through<br />
control controlof ofclient clientcompany<br />
company<br />
or orpossession possessionof ofassets<br />
•• Damage Damagetoto<br />
reputation reputationthrough<br />
through<br />
association associationwith<br />
with<br />
pollut<strong>in</strong>g pollut<strong>in</strong>gor<br />
or<br />
‘unethical’ ‘unethical’ customers customers<br />
<strong>Environmental</strong> risk should also be considered at a portfolio level<br />
A bank should avoid overexposure to particular <strong>in</strong>dustries<br />
sensitive to environmental pressures<br />
PricewaterhouseCoopers<br />
5 April 2006 .