Banks should consider the environmental impact of their financing and investments, especially when they concern the oil sector, the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, has said.
Speaking at the Banking and Allied Matters conference for judges, he explained that global environmental impact of businesses which are largely financed by the industry suggests that the sector has not given adequate attention to environmental impact of their funding.
The seminar, which has as theme, Sustainable banking practice in Nigeria: The journey so far and the way forward, was organised by the Chartered Institute of Bankers of Nigeria (CIBN) and the National Judicial Institute (NJI).
Sanusi said the tendency to view banking as an environment-friendly business was common place, adding that on the surface, it seems not to be of harm to the environment and society.
“However, the banking sector has been profiting from financing of environmentally unfriendly sectors. Financing of the energy sector, which is usually the villain on matters of environmental degradation across the world, is a trite example. This sector is perhaps the most capital intensive sector and depends on the financial system to mobilise funds for its highly capital intensive operations,” he said.
Sanusi said statistics abound on how spillage has degraded environment and destroyed farmlands and aquatic life, thereby incapacitating the people economically and perpetuating poverty, adding that there have also been various reports of chemical emissions from our industries resulting in health complications within affected localities with its attendant societal/public cost.
He said until recently, the country’s banking industry had not given much attention to sustainability beyond ticking off environmental impact assessment on checklist for credit risk assessment for evaluation of loan applications, other jurisdictions have for decades been engraving sustainability ethos in their financial system.
He said since the 1980s, banks in the United States had been held directly answerable (under CERCLA-Comprehensive Environmental Response, Compensation and Liability Act) for the negative impact the businesses they financed had on the environment and some of them became bankrupt thereof.
The Europeans followed suit in the mid-90s while the activities of multilateral development institutions, such as the World Bank, International Finance Corporation (IFC), European Bank for Reconstruction and Development, had influenced sustainability considerations in the financial sectors in Asia and South America.
CIBN President, Segun Aina said the seminar had become a significant forum where respected jurists, legal luminaries and other key legal personalities interact with the chieftains of the banking industry.
He said that it helps the stakeholders to discuss contemporary banking and legal issues aimed at improving the Nigerian banking environment and related judicial processes.