Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee
In the environmental context banks face direct, indirect and reputational risks from their internal operations and their external business activities. The current specific focus on the protection of the environment makes it essential for banks and their directors to be aware and stay on top of poten...
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ndltd-NWUBOLOKA1-oai-dspace.nwu.ac.za-10394-106442014-09-30T04:06:31ZSustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik CoetzeeCoetzee, Johannes HendrikSustainable bankingSouth African banksSustainabilitySustainable developmentReputational riskEnvironmental risks and liabilitiesCriminal liability of directorsThe green economyStrong sustainabilityLender liabilityThe Equator PrinciplesVolhoubaarheid en bankeSuid-Afrikaanse bankeVolhoubaarheidVolhoubare ontwikkelingReputasie-risikoOmgewingsrisikos en -verpligtingeKriminele verpligtinge van direkteureDie groen ekonomieSterk volhoubaarheidLeen-verpligtinge / uitlener verpligtingeDie EkwatorbeginselsIn the environmental context banks face direct, indirect and reputational risks from their internal operations and their external business activities. The current specific focus on the protection of the environment makes it essential for banks and their directors to be aware and stay on top of potential risks and liabilities. This is especially so because banks’ directors can be criminally prosecuted for environmental crimes. The application and effect of the Prevention of Organised Crime Act 121 of 1998 (POCA) on persons convicted of an environmental crime or crimes has been identified as a possible new or added risk for banks and their directors. Banks in addition to their normal environmental risk and liabilities also need to contend with the possibility of lender liability. Existing legislation pertinent to lender liability does not expressly or specifically deal with lender liability. Absence of judgements on lender liability further exacerbates the risks and the uncertainty for banks in South Africa. Therefore, banks remain subject to legal uncertainty and associated risks. The issue of lender liability specifically with regard to the implication of “the person in control” requires clarification. Hence, it is recommended that legislation relevant to lender liability (National Environmental Management Act 107 of 1998; National Water Act 36 of 1998 and the National Environmental Management: Waste Act 59 of 2008) be revised to specifically accommodate and protect lenders (lending banks) in certain distinct circumstances. The role of banks is that of an intermediary between borrowers and lenders of money. Therefore, it influences the direction and pace of economic development and by default steers and promotes either sustainable or non-sustainable development. Currently, mainstream banks are in effect financing a brown economy and hence subscribe to a weak form of sustainability. It would seem that mainstream banks are more concerned with managing the impact that environmental risk may have on bank lending than the impact of bank lending on the environment. The evolving nature of sustainability (from weak to strong and from a brown to green economy) demands a fundamental policy change for banks. It is expected that mainstream banks will be put under even greater pressure than before to make the transition from weak to strong sustainability. Hence, banks’ current environmental risk management systems will not be sufficient to cater for new environmental risks and liabilities that the move to stronger sustainability (in the form of the green economy) will present. Banks should adopt the stronger version of sustainability; formulate environmental principles that the bank will adhere to; incorporate these environmental principles into all aspects of its lending cycle, develop an environmental risk management system that should include as a minimum the identification of all the applicable legislation pertaining to the specific financing or lending of capital, risk identification, assessment of the specific risk, implementation of risk control measures, mitigation of the risk, risk monitoring and auditing.LLM (Environmental Law and Governance), North-West University, Potchefstroom Campus, 20142014-06-09T13:37:37Z2014-06-09T13:37:37Z2013Thesishttp://hdl.handle.net/10394/10644en |
collection |
NDLTD |
language |
en |
sources |
NDLTD |
topic |
Sustainable banking South African banks Sustainability Sustainable development Reputational risk Environmental risks and liabilities Criminal liability of directors The green economy Strong sustainability Lender liability The Equator Principles Volhoubaarheid en banke Suid-Afrikaanse banke Volhoubaarheid Volhoubare ontwikkeling Reputasie-risiko Omgewingsrisikos en -verpligtinge Kriminele verpligtinge van direkteure Die groen ekonomie Sterk volhoubaarheid Leen-verpligtinge / uitlener verpligtinge Die Ekwatorbeginsels |
spellingShingle |
Sustainable banking South African banks Sustainability Sustainable development Reputational risk Environmental risks and liabilities Criminal liability of directors The green economy Strong sustainability Lender liability The Equator Principles Volhoubaarheid en banke Suid-Afrikaanse banke Volhoubaarheid Volhoubare ontwikkeling Reputasie-risiko Omgewingsrisikos en -verpligtinge Kriminele verpligtinge van direkteure Die groen ekonomie Sterk volhoubaarheid Leen-verpligtinge / uitlener verpligtinge Die Ekwatorbeginsels Coetzee, Johannes Hendrik Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
description |
In the environmental context banks face direct, indirect and reputational risks from their
internal operations and their external business activities. The current specific focus on
the protection of the environment makes it essential for banks and their directors to be
aware and stay on top of potential risks and liabilities. This is especially so because
banks’ directors can be criminally prosecuted for environmental crimes. The application
and effect of the Prevention of Organised Crime Act 121 of 1998 (POCA) on persons
convicted of an environmental crime or crimes has been identified as a possible new or
added risk for banks and their directors. Banks in addition to their normal environmental
risk and liabilities also need to contend with the possibility of lender liability. Existing
legislation pertinent to lender liability does not expressly or specifically deal with lender
liability. Absence of judgements on lender liability further exacerbates the risks and the
uncertainty for banks in South Africa. Therefore, banks remain subject to legal
uncertainty and associated risks. The issue of lender liability specifically with regard to
the implication of “the person in control” requires clarification. Hence, it is recommended
that legislation relevant to lender liability (National Environmental Management Act 107
of 1998; National Water Act 36 of 1998 and the National Environmental Management:
Waste Act 59 of 2008) be revised to specifically accommodate and protect lenders
(lending banks) in certain distinct circumstances.
The role of banks is that of an intermediary between borrowers and lenders of money.
Therefore, it influences the direction and pace of economic development and by default
steers and promotes either sustainable or non-sustainable development. Currently,
mainstream banks are in effect financing a brown economy and hence subscribe to a
weak form of sustainability. It would seem that mainstream banks are more concerned
with managing the impact that environmental risk may have on bank lending than the
impact of bank lending on the environment. The evolving nature of sustainability (from
weak to strong and from a brown to green economy) demands a fundamental policy
change for banks. It is expected that mainstream banks will be put under even greater
pressure than before to make the transition from weak to strong sustainability. Hence,
banks’ current environmental risk management systems will not be sufficient to cater for
new environmental risks and liabilities that the move to stronger sustainability (in the
form of the green economy) will present. Banks should adopt the stronger version of sustainability; formulate environmental
principles that the bank will adhere to; incorporate these environmental principles into all
aspects of its lending cycle, develop an environmental risk management system that
should include as a minimum the identification of all the applicable legislation pertaining
to the specific financing or lending of capital, risk identification, assessment of the
specific risk, implementation of risk control measures, mitigation of the risk, risk
monitoring and auditing. === LLM (Environmental Law and Governance), North-West University, Potchefstroom Campus, 2014 |
author |
Coetzee, Johannes Hendrik |
author_facet |
Coetzee, Johannes Hendrik |
author_sort |
Coetzee, Johannes Hendrik |
title |
Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
title_short |
Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
title_full |
Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
title_fullStr |
Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
title_full_unstemmed |
Sustainability-environmental risks and legal liabilities of South African banks / Johannes Hendrik Coetzee |
title_sort |
sustainability-environmental risks and legal liabilities of south african banks / johannes hendrik coetzee |
publishDate |
2014 |
url |
http://hdl.handle.net/10394/10644 |
work_keys_str_mv |
AT coetzeejohanneshendrik sustainabilityenvironmentalrisksandlegalliabilitiesofsouthafricanbanksjohanneshendrikcoetzee |
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1716715523244294144 |