Workshop on Environmental Credit Risk

4 May 2006 | Copenhagen

Hosted by the Finansraadet (The Danish Bankers Association), the workshop focused on environmental credit risk in financial institutions. During the workshop, case studies were provided for different types of environmental risks. Some examples of risk management tools such as land use investigation and environmental impact assessment (Equator Principles) were also shared. One of the discussions centred around possible opportunities that could result in environmental credit risk assessment such as, identifying clients needs for capital spend( e.g. upgrading equipment to comply with permit) and major corporations seeking out environmentally aware banks that understand and face similar business drivers and stakeholder expectations.

Key Ideas

  • Sustainability and CSR issues are now permanent strategic factors.
  • There is more focus on structural commitment than just ticking boxes.
  • Corporate social responsibility (CSR) is the way forward for a company to maintain and develop relations with stakeholders. There has been an increase in corporations focusing on social responsibility, due to rising pressure to report publicly on progress.
  • The UN Millennium Development Goals for financial institutions have seen an increase in shareholder activism.
  • Stakeholders recognise that a banks lending practices represent its most significant environmental impact.
  • Environmental way of thinking is a priority within the organization. Internal and external communication is very important. It is important to have clear communication internally before communicating outside.
  • Building bridges is better than building fences.
  • Direct environmental impacts such as disclosing CO2 emissions are getting more specific.
  • Indirect environmental impacts – policy making versus risk management – there seems to be a tendency among commercial banks that they should not become policy makers. In countries without a proper regulatory framework there is a moral obligation; in the western world indirect environmental impacts should be managed from a risk management perspective. The challenge is to set up procedures to systematically manage environmental risks

Participants

Alecta Landsbanki Islands hf. (The National Bank of Iceland)
Barclays Bank Länsförsäkringar
Danske Bank A/S Nordea AB
DnB NOR Skandinaviska Enskilda Banken (SEB)
Ekobanken – Din Medlemsbank Storebrand
Folksam Svenska Handelsbanken
KLP Insurance Swedbank AB (Föreningbanken Sparbanken)
KPA AB UNEP FI

Presentations

Among the speakers were Chris Bray from Barclays Bank, Knut Rorbakken from Nordea AB, Frederik Reumert from Danske Bank, Eva Sandberg from Alecta and Carina Lundberg from Folksam. Presentations Summary (PDF: 70 KB)