The Changing Environment of Banks

Due to their intermediary role in the economy, banks hold a unique position with regard to sustainable development. This intermediary role is both quantitative and qualita-tive. Due to their efficient credit approval systems, banks are well equipped to weigh risks and attach a price to these risks. Through such price differentiation, banks can foster sustainability. Banks can also develop more sustainable products, such as envi-ronmental or ethical investment funds. In addition, there is great scope for banks to improve their internal environmental performance. This paper examines the devel-opment of environmental concern in banks, their environmental impact, their role in the economy and the driving forces for more proactive policies toward sustainable development. A typology is presented categorising four stages of attitudes toward environmental problems: defensive, preventative, offensive and sustainable banking. The paper illustrates that governmental policy is an important factor in designing the context that shapes some, but not all, of the actions taken by the banking sector. An overview of the match between Dutch environmental policy and the role of the banking sector is presented. Finally, some conclusions are drawn with regard to the possible future role of banks towards sustainability. Dr Jan Jaap Bouma is Assistant Professor at the Erasmus University in Rotterdam, Netherlands. He is an economist and took his doctor’s degree at the Erasmus University in 1995 on a dissertation on environmental management in the Dutch Royal Airforce and industrial corporations. His research field includes environmental management accounting and financing environmental management within the business sector and public agencies.