In the banking sector, new standards and codes of conduct have been promoting corporate accountability, the need for transparency, and the need for management of risks for environment and society. They have recognized the need for sustainability as part of financing.
The traditional approach of the banking sector to sustainability needed to be adjusted, as financial statements alone did not present the whole picture of the sustainability of the business. Under this type of review, potential environmental liabilities, such as decommissioning costs that can create financial risks, can go undetected unless disclosed by the borrower. This may then impair the borrower in repaying the loan. Banks now look to new programs designed for environmental business.
IFC’s definition of sustainability as outlined in its “Banking on Sustainability” report is about ensuring long-term business success while contributing toward economic and social development, a healthy environment, and a stable society.
Chris Coulter, vice president of GlobeScan Inc. (international public opinion researchers), from “Banking on Sustainability – Financing Environmental and Social Opportunities in Emerging Markets” IFC, World Bank Group outlined is quoted in the report:
The role of companies in a society is currently going through a transition that presents important opportunities and, in many ...