An environment could be defined as the natural world as a whole or in a particular geographical area especially as affected by human activity. This includes the surroundings or conditions in which a person, animal or plant lives or operates.
The theme for last year’s World Environment Day was: TIME FOR NATURE meaning that adequate attention must be paid to the preservation and conservation of our environment. Simply put, efforts must be made to discourage all activities – economic or otherwise geared towards unnecessary deforestation, extermination and destruction of the ecosystem.
Banks, being part of the ecosystem, must not be seen to either encourage or foster activities that would negatively impact on the environment to avoid reputational risk that might arise from negative publicity, litigation, protests and uproars by the host communities. This might also result in liability and credit risks from the inability of borrowers to meet their obligations.
The banks are therefore expected to do the following:
(1) Discourage all activities that would negatively impact on the environment;
(2) Organize or encourage activities that would preserve and conserve the environment including seminars, reforestation, etc;
(3) They should either discourage any lending proposal that there activity would negatively impact on the environment; and
(4) If the banks must oblige the request on item 3 above, it must ensure that the negative effect or impact is strongly mitigated and that adequate compensation is made to the sufferers. They must also ensure that the benefits of such projects outweigh the costs.
Thank you.
Isaiah JIRINGHO, FCIB