How strategic environmental assessment can inform lenders about potential environmental risks

In this paper, we explore the potential for strategic environmental assessment (SEA) to be a useful tool for banks to manage environmental risks and inform lending decisions. SEA is an environmental assessment tool that was developed to assist strategic-level decision-makers, such as policy-makers,...

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Bibliographic Details
Published in:Impact assessment and project appraisal 2015-01, Vol.33 (1), p.68-72
Main Authors: Banhalmi-Zakar, Zsuzsa, Larsen, Sanne Vammen
Format: Article
Language:English
Subjects:
Banks
Decision analysis
Environmental impact
Environmental impact studies
environmental risk
Pollution control
project finance
Risk assessment
Risk management
strategic environmental assessment
Studies
Sustainability
Sustainable development
Transaction costs
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Summary:In this paper, we explore the potential for strategic environmental assessment (SEA) to be a useful tool for banks to manage environmental risks and inform lending decisions. SEA is an environmental assessment tool that was developed to assist strategic-level decision-makers, such as policy-makers, planners, government authorities and environmental practitioners in improving developmental outcomes, aiming to facilitate the transition to sustainable development. We propose that SEA may also be a valuable tool for banks because it has the capacity to provide information about environmental risks at a time when it can be used as an input to bank lending decisions, which can assist banks in making lending decisions with better environmental outcomes. For these reasons, we argue that in some circumstances, and particularly for project finance transactions, SEA may be a more useful environmental assessment tool for lenders than environmental impact assessment, which many banks are currently relying on to help assess and mitigate environmental risks. Furthermore, we suggest that the use of SEA by banks would contribute to the sustainability goals of SEA.
ISSN:1461-5517
1471-5465
DOI:10.1080/14615517.2014.941143