Namibian banks and environmental risks in lending processes

[摘要] This paper examines how banks in Namibia are incorporating environmental risks into their lending processes.Over the last decade considerable work has been undertaken in banks in various parts of the world to consider the environmental impact of projects they finance as part of their lending decisions. Loans are the very nature for the existence of banks and therefore, the proper management of loans is a key priority for banks. Since most projects financed by banks are associated with a certain degree of environmental impact translating into risks, these risks can result in a decrease in the borrower's repayment ability, a weakening in the value of the security and potential risks to the bank's reputation. In Namibia, no literature exists documenting how banks have performed inincorporating environmental risks into their lending processes as well asdocumenting banks' environmental reports as part of their corporate socialresponsibility. A qualitative research method through interviews was used for the study, where open-ended questions were administered on five banks in Namibia.The findings indicate that incorporating environmental risks remains a hugechallenge for Namibian banks due to the lack of in-house capacity to undertake such a process, coupled with their lack of environmental awareness and training. Furthermore, the lack of awareness of environmental risks are further exacerbated by the fact that most bank people dealing with lending processes have not undergone environmental risk assessment training or related training associated with risks in lending processes. There is a need for banks in Namibia to consider developing integrated reporting systems that consider an enterprise-wide riskmanagement (ERM) framework recognising the interconnectedness of different risks and establish clear organisational reporting structures in order to ensure processes and policies are in place to manage these risks.

[发布机构] University of the Free State