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Bringing the environment into bank lending: implications for environmental reporting

Cowton, Christopher J. and Thompson, P. (2004) Bringing the environment into bank lending: implications for environmental reporting. British accounting review, 36 (2). pp. 197-218. ISSN 0890-8389

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    In recent years, it has come to be recognised that banks’ lending operations affect, and are affected
    by, the state of the natural environment. In particular, rising public concern about the state of the
    natural environment, as reflected in legislation and consumer attitudes, poses risks for the state of a
    bank’s lending portfolio. Even if they are not directly concerned about the environment, banks
    therefore have an incentive to understand the environmental implications of their lending decisions.
    This generates a potential demand for environmental information on companies.
    This paper reports on empirical research conducted to explore the interface between bank lending
    and the demand for environmental information. Based on a postal questionnaire survey of banks
    engaged in corporate lending in the UK, supplemented by a programme of semi-structured
    interviews, it reports on: the extent to which UK banks incorporate environmental considerations
    into their corporate lending decisions; the sources of information used by banks when making
    corporate lending decisions which involve environmental considerations; and lending bankers’
    views on developments in environmental reporting.
    The results indicate, inter alia, the importance that bankers attach to the annual report,
    notwithstanding its traditional limitations as a source of information on corporate environmental
    impact, and some desire for extensions to environmental disclosure. However, those desired
    developments are relatively narrow in scope, mirroring banks’ principal interest in protecting their
    loans, and tend not to extend to more comprehensive forms of environmental disclosure such as
    might be expected to be found in a separate corporate environmental report.

    Item Type: Article
    Additional Information: UoA 35 (Accounting and Finance) © 2004 Elsevier Ltd. All rights reserved.
    Subjects: H Social Sciences > HG Finance
    H Social Sciences > HJ Public Finance
    Schools: The Business School
    The Business School > Financial Ethics and Governance Research Group
    Related URLs:

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    Depositing User: Sara Taylor
    Date Deposited: 01 Mar 2007
    Last Modified: 01 May 2013 08:16


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