Computing and Library Services - delivering an inspiring information environment

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

[img] PDF
Restricted to Repository staff only

Download (168kB)


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: Huddersfield Business School
Huddersfield Business School > Financial Ethics and Governance Research Group
Related URLs:
References: ASSC, 1975, 1975. The Corporate Report. Institute of Chartered Accountants in England and Wales, London. Babbie, E.R., 1973. Survey Research Methods, Belmont, CA, Wadsworth.. Berry, A., Citron, D., Jarvis, R., 1987. The Information Needs of Bankers Dealing with Large and Small Companies (ACCA Research Report 7). Certified Accountant Publications, London. Berry, R.H., Crum, R.E., Waring, A., 1993. Corporate Performance Evaluation in Bank Lending Decisions. Chartered Institute of Management Accountants Press, London. Bryman, A., 2001. Social Research Methods. Oxford University, Oxford. Buxton, A., 1997. Business ethics: getting on the right track. CIB News, February, 1–4. Case, P., 1996. Land, lending and liability. Chartered Banker 2 (4), 44–49. Coulson, A.B., Dixon, R., 1995. Environmental risk and marketing strategy: implications for financial institutions. International Journal of Bank Marketing 13 (2), 22–29. Cowton, C.J., 2002. Integrity, responsibility and affinity: three aspects of ethics in banking. Business Ethics: a European Review 11 (4), 393–400. Cowton, C.J., Drake, J.E., Thompson, P., 2000. Charities’ bankers: an analysis of UK market shares. International Journal of Bank Marketing 18 (1), 42–46. Cowton, C.J., Thompson, P., 1999. Ethical Banking: Progress and Prospects. Financial Times Business, London. Cowton, C.J., Thompson, P., 2000. Do codes make a difference? The case of bank lending and the environment. Journal of Business Ethics 24 (2), 165–178. Cowton, C.J., Thompson, P., 2001. Financing the social economy: a case study of Triodos Bank. International Journal of Nonprofit and Voluntary Sector Marketing 6 (2), 145–155. Davis, P., Worthington, S., 1993. Cooperative values: change and continuity in capital accumulation—the case of the British Co-operative Bank. Journal of Business Ethics 12 (11), 849–859. Dawson, A.W., 1996. Pollution and the uncertainty principle, Chartered Secretary, September. Deegan, C., Rankin, M., 1997. The materiality of environmental information to users of annual reports. Accounting, Auditing and Accountability Journal 10 (4), 562–583. Deegan, C., Rankin, M., 1999. The environmental reporting expectations gap: Australian evidence. British Accounting Review 31 (3), 313–346. Epstein, M.J., Freedman, M., 1994. Social disclosure and the individual investor. Accounting, Auditing and Accountability Journal 7 (4), 94–109. Fink, A., 1995. How to Analyze Survey Data. Sage, Thousand Oaks, CA. Foley, B.J., Maunders, K.T., 1977. Accounting Information Disclosure and Collective Bargaining. Macmillan, London. Gray, R., 1990. The Greening of Accountancy: The Profession after Pearce. Certified Accountants Publications, London. Gray, R., 1992. Accounting and environmentalism: an exploration of the challenge of gently accounting for accountability, transparency and sustainability. Accounting, Organizations and Society 17 (3), 399–425. Gray, R., Bebbington, J., 2001. Accounting for the Environment, second ed., Sage, London. Gray, R., Kouhy, R., Lavers, S., 1995. Corporate social and environmental accounting: a review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing and Accountability Journal 8 (2), 47–77. Griffith, R., 1992. Postscript: using annual reports for ethical decision-making. In: Owen, D., (Ed.), Green Reporting: Accountancy and the Challenge of the Nineties, pp. 256–261. Harte, G., Lewis, L., Owen, D., 1991. Ethical investment and the corporate reporting function. Critical Perspectives on Accounting 2 (3), 227–253. Harvey, B., 1995. Ethical banking: the case of the Co-operative Bank. Journal of Business Ethics 14 (12), 1005–1013. Hill, J., Fedrigo, D., Marshall, I., 1997. Banking and the Future: A Survey of Implementation of the UNEP Statement by Banks on the Environment and Sustainable Development. Green Alliance, London. ICAEW, 1992. Accountancy and the Environment: A Policy and Research Agenda. Institute of Chartered Accountants in England and Wales, London. Kitson, A., 1996. Taking the pulse: ethics and the British Co-operative Bank. Journal of Business Ethics 15 (9), 1021–1031. Laughlin, R.C., Puxty, A.G., 1981. The decision-usefulness criterion: wrong cart, wrong horse? AUTA Review 13 (1), 43–87. Lee, T.A., Tweedie, D.P., 1981. The Institutional Investor and Financial Information. Institute of Chartered Accountants in England and Wales, London. Macve, R., 1981. A Conceptual Framework for Financial Accounting and Reporting: The Possibilities for an Agreed Structure. Institute of Chartered Accountants in England and Wales, London,. Maltby, J., 1997. Setting its own standards and meeting those standards: voluntarism versus regulation in environmental reporting. Business Strategy and the Environment 6 (2), 83–92. Oppenheim, A.N., 1992. Questionnaire Design Interviewing and Attitude Measurement, New Edition, Continuum, London. Owen, D., 1992. Green Reporting: Accountancy and the Challenge of the Nineties. Chapman and Hall, London. Owen, D., Gray, R., Bebbington, J., 1997. Green accounting: cosmetic irrelevance or radical agenda for change? Asia-Pacific Journal of Accounting 4 (2), 175–198. Perks, R.W., 1993. Accounting and Society. London, Chapman and Hall. Puxty, A.G., Laughlin, R.C., 1983. Accounting regulation: an alternative perspective. Journal of Business Finance and Accounting 10 (3), 451–479. Ramanathan, K.V., 1976. Toward a theory of corporate social accounting. Accounting Review 51 (3), 516–528. Rockness, J., Williams, P.F., 1988. A descriptive study of social responsibility mutual funds. Accounting, Organizations and Society 12 (4), 397–411. Rubenstein, D.B., 1992. Bridging the gap between green accounting and black ink. Accounting, Organizations and Society 17 (5), 501–508. Sarokin, D., Schulkin, J., 1991. Environmental concerns and the business of banking. Journal of Commercial Bank Lending 74 (5), 6–19. Siegel, S., 1956. Non Parametric Statistics for the Behavioral Sciences. International Students Edition, New York. Smith, D.R., 1994. Environmental Risk: Credit Approaches and Opportunities: An Interim Report. United Nations Environment, McGraw Hill, Geneva. Spencer-Cooke, A., 1994. Where Silence is not Golden, ACCA Occasional Research Paper, Certified Accountants Educational Programme Trust, London. Taberner, J., Gibb, S., Sweeney, D., 1991. Learning to live with green law, International Financial Law Review, Special Supplement, February, pp. 7–10. Thompson, P., 1998a. Assessing the environmental risk exposure of UK banks. International Journal of Bank Marketing 16 (3), 129–139. Thompson, P., 1998b. Bank lending and the environment: policies and opportunities. International Journal of Bank Marketing 16 (6), 243–252. Thompson, P., 1999a. Exploiting lending opportunities in the environmental technology and service sector. Journal of Financial Services Marketing 3 (3), 231–246. Thompson, P., 1999b. The future of commercial banking—the internet, stakeholders and ethics: a case study of the Co-operative Bank. Journal of Financial Services Marketing 3 (4), 316–333. UNEP, 1992. Banking and the Environment—A Statement by Banks on the Environment and Sustainable Development. United Nations Environment Programme, Geneva. UNEP, 1995. UNEP Global Survey: Environmental Policies and Practices of the Financial Services Sector. United Nations Environment Programme, Geneva. Vaughan, S., 1994. Environmental Risk and Commercial Banks: Discussion Paper. United Nations Environment Programme, Geneva. Wanless, D., 1995. The Gilbert Lecture 1995: Banking and the Environment. Chartered Institute of Bankers, London.
Depositing User: Sara Taylor
Date Deposited: 01 Mar 2007
Last Modified: 30 Mar 2018 17:31


Downloads per month over past year

Repository Staff Only: item control page

View Item View Item

University of Huddersfield, Queensgate, Huddersfield, HD1 3DH Copyright and Disclaimer All rights reserved ©