The impact of bank lending on the environmental outcomes of urban development

Banhalmi-Zakar, Zsuzsa (2016) The impact of bank lending on the environmental outcomes of urban development. Australian Planner, 53 (3). pp. 221-231.

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Abstract

Financial institutions play an important role as financiers of development, yet little is known about the key players; what processes they employ, how they make decisions and whether the environmental outcomes of development feature in finance decisions. This paper provides some answers as to how banks perceive and deal with the environmental impacts of development drawing on the literature and a case study of development lending practices in Australia and Europe, in the pre-Global Financial Crisis era. The banks studied financed a diverse range of residential, commercial, and industrial, transport and social infrastructure developments through different schemes. The schemes used determined if and how environmental issues translated into financial risks and opportunities and impacted finance decisions. The banks relied heavily on development/planning or environmental approvals as well as assessments by non-environmental experts. Delays in obtaining approvals posed a significant risk to financiers and, consequently, to developers. Exposure to reputational risk was a major concern for the Australian bank, but fines for breaching environmental regulations were not regarded as a threat. Several recommendations are made to planning and environmental practitioners, regulators and banks on advancing practices that could improve environmental outcomes of urban development.

Item ID: 47383
Item Type: Article (Research - C1)
ISSN: 2150-6841
Keywords: development finance, environmental impact assessment, environmental risk, reputational risk
Date Deposited: 21 Feb 2017 22:12
FoR Codes: 05 ENVIRONMENTAL SCIENCES > 0502 Environmental Science and Management > 050204 Environmental Impact Assessment @ 30%
12 BUILT ENVIRONMENT AND DESIGN > 1205 Urban and Regional Planning > 120504 Land Use and Environmental Planning @ 40%
15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1503 Business and Management > 150303 Corporate Governance and Stakeholder Engagement @ 30%
SEO Codes: 96 ENVIRONMENT > 9607 Environmental Policy, Legislation and Standards > 960708 Urban Land Policy @ 40%
96 ENVIRONMENT > 9605 Ecosystem Assessment and Management > 960511 Ecosystem Assessment and Management of Urban and Industrial Environments @ 40%
91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910206 Market-Based Mechanisms @ 20%
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