Sustainable banking

Niamh, O’Sullivan

Abstract

Sustainable banking refers to the integration of environmental and social issues into banking activities, principally including commercial and retail banking. As with institutional investors, sustainability issues in the banking sector are primarily considered from a risk management and opportunities perspective. This is because environmental issues (e.g. water, air, or land pollution) and social issues (e.g. human rights) can pose significant financial risks to commercial and retail lenders alike. For instance, legal fines, clean-up expenses, and/or delays to projects caused by corporate borrower environmental pollution or social injustices can place the borrower in potential default of their loans. In addition, significant reputational risk due to association with these (often publicly tarnished) borrowers can be posed to commercial lenders. Likewise, where borrower sustainability risks can be minimized or avoided, lenders have the opportunity to secure better-performing loans, and can simultaneously support activities that have less detrimental environmental and social impacts. In doing so, the concept of sustainable banking recognises that banks have a corporate social responsibility to mitigate financial and sustainability-oriented risks.

Citation

Niamh, O. (2024). Sustainable banking. In L. Matthews, L. Bianchi, & C. Ingram (Eds.), Concise Encyclopedia of Corporate Social Responsibility (187-191). Edward Elgar Publishing. https://doi.org/10.4337/9781800880344.ch35

• Online Publication Date: Jan 28, 2024
• Publication Date: Jan 28, 2024
• Deposit Date: Oct 16, 2024
• Publisher: Edward Elgar Publishing
• Peer Reviewed: Peer Reviewed
• Pages: 187-191
• Book Title: Concise Encyclopedia of Corporate Social Responsibility
• Chapter Number: 35
• ISBN: 9781800880337
• DOI: https://doi.org/10.4337/9781800880344.ch35
• Keywords: Corporate Social Responsibility; Sustainable Banking; Environmental and Social Credit Risk Management; Mitigation; Risk Management; Reputational Risk; Equator Principles; Accountability; Sustainable Finance
• Public URL: https://nottingham-repository.worktribe.com/output/40582775
• Publisher URL: https://www.elgaronline.com/display/book/9781800880344/ch35.xml