Site Value Crucial to World Economy
SINGAPORE - Banks must protect the environment or risk losing money, officials said Thursday.
Bankers and government officials attending a U.N.-sponsored conference on finance and the environment told Reuters that pollution was quickly becoming one of the biggest risks facing companies and the institutions that lend them money.
Pressure to consider the environment was rising rapidly in Europe and the United States and would soon be a major factor in Asia and the rest of the developing world, they said.
"Why do banks need to think about the environment? Because, No. 1, they want to be paid back," said Dennis Zvinakis, field director for the United States Asia Environmental Partnership agency in the Philippines.
"It may affect our bottom line," agreed Heinrich Hugenschmidt, head of environmental management services at the Union Bank of Switzerland in Zurich. "The environmental problems of our clients may become our financial problems."
"We distinguish three main environmental risks: liability risks, business risks -- if our clients are affected by environmental issues, so are we -- and reputation risks."
One of the biggest risks from pollution was its potential impact on the security of loans, said Charles Crowe, legal adviser to HSBC Holdings.
"A large proportion of loans are secured on land. If the customer that has given you that security carries out a polluting activity on that land, your security is worth nothing," he said.
Officials said shareholders and governments were increasingly insisting that firms which damaged the world around them were penalized or even had their operations shut down.
Copyright © 1997 Reuters
So, it seems that the average eight-year-old can grasp the world economic reality better than the average neoclassical economist. Until neoclassical economists give up their crumbling "natural resources are just like capital" religion, their opinions will simply not be relevant in articles about environmental ecnonomics.
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