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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Main Author: Coetzee, Johannes Hendrik
Language:en
Published: 2014
Subjects:
Online Access:http://hdl.handle.net/10394/10644
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spelling 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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