Should banks be liable for pollution caused by companies that borrow from them?
December 02, 1999His team of lawyers, economists and financial analysts finds that:
NR 67-99
Examples of recent environmental regulations that hold polluters liable for the costs of their pollution include: the 1980 Comprehensive Environmental Response Compensation and Liability Act (CERCLA) in the US, the Council of Europe's 1993 Lugano Convention, and the UK's 1995 Environment Act, all of which relate principally to hazard waste sites.
The rationale for these pieces of legislation is that by internalising the environmental costs of their actions, polluters will have incentives to take steps to reduce environmental damages to an appropriate level. But if environmental damages are high and polluters are protected by limited financial liability, then they may escape much of the environmental liability. This will reduce their incentives to take appropriate care.
The thinking behind extending liability to lenders is to mitigate this 'judgement proofness' problem, giving banks the incentives to ensure that firms take appropriate steps to reduce the risk of environmental damage as a condition of getting access to credit. But the central problem of extending liability is that if lenders find it difficult to monitor the environmentally riskiness of certain projects, they may respond by simply refusing credit to certain classes of risks, with potentially damaging effects on investment financing decisions.
-end-
For further information, please contact Professor Alistair Ulph, telephone 01703-592544 (office), email:amu@soton.ac.uk; or ESRC Media Consultant Romesh Vaitilingam, telephone 0117-983-9770 or 0468-661095, email: romesh@compuserve.com.NOTES FOR EDITORS
1. The research project 'The Financial Implications of Environmental Legislation', by Professor Alistair Ulph and colleagues in the Departments of Economics and Management and the Faculty of Law at the University of Southampton, was funded by the Economic and Social Research Council (ESRC).
2. The ESRC is the UKs leading independent funder of research and postgraduate training in social and economic issues. It currently has an annual budget of around £65 million from the Government.
Economic & Social Research Council
Related Environment Articles from Brightsurf:
Detecting SARS-CoV-2 in the environment
Researchers have outlined an approach to characterize and develop an effective environmental monitoring methodology for SARS CoV-2 virus, that can be used to better understand viral persistence in built environments.
Can your diet help protect the environment?
If Americans adhere to global dietary recommendations designed to reduce the impact of food production and consumption, environmental degradation could be reduced by up to 38%, according to a new paper published in the journal Environmental Justice.
How do we disconnect from the environment during sleep and under anesthesia?
A series of new studies by researchers at Tel Aviv University's Sackler Faculty of Medicine and Sagol School of Neuroscience finds, among other important discoveries, that noradrenaline, a neurotransmitter secreted in response to stress, lies at the heart of our ability to ''shut off'' our sensory responses and sleep soundly.
Our pupil moves to the rhythm of the environment
Regular processes in the environment improve our eyesight.
New self-forming membrane to protect our environment
A new class of self-forming membrane has been developed by researchers from Newcastle University, UK.
COVID-19 and the built environment
Social distancing has Americans mostly out of the places they usually gather and in their homes as we try to reduce the spread of COVID-19.
A broad look at plant-environment interactions
Three plant science journals---the American Journal of Botany (AJB), Applications in Plant Sciences (APPS), and the International Journal of Plant Sciences (IJPS)---have joined efforts to provide a broad look at how plants interact with their environment.
New research looks at type 1 diabetes and changes in the environment
Studies have shown a rapid increase in new cases of type 1 diabetes worldwide.
Chemicals in the environment: A focus on mixtures
The real world is marked by multiple stressors, among them cocktails of chemicals.
Rubber in the environment
The tread on the tyre is worn out, new tyres are needed.
Read More: Environment News and Environment Current Events
Researchers have outlined an approach to characterize and develop an effective environmental monitoring methodology for SARS CoV-2 virus, that can be used to better understand viral persistence in built environments.
Can your diet help protect the environment?
If Americans adhere to global dietary recommendations designed to reduce the impact of food production and consumption, environmental degradation could be reduced by up to 38%, according to a new paper published in the journal Environmental Justice.
How do we disconnect from the environment during sleep and under anesthesia?
A series of new studies by researchers at Tel Aviv University's Sackler Faculty of Medicine and Sagol School of Neuroscience finds, among other important discoveries, that noradrenaline, a neurotransmitter secreted in response to stress, lies at the heart of our ability to ''shut off'' our sensory responses and sleep soundly.
Our pupil moves to the rhythm of the environment
Regular processes in the environment improve our eyesight.
New self-forming membrane to protect our environment
A new class of self-forming membrane has been developed by researchers from Newcastle University, UK.
COVID-19 and the built environment
Social distancing has Americans mostly out of the places they usually gather and in their homes as we try to reduce the spread of COVID-19.
A broad look at plant-environment interactions
Three plant science journals---the American Journal of Botany (AJB), Applications in Plant Sciences (APPS), and the International Journal of Plant Sciences (IJPS)---have joined efforts to provide a broad look at how plants interact with their environment.
New research looks at type 1 diabetes and changes in the environment
Studies have shown a rapid increase in new cases of type 1 diabetes worldwide.
Chemicals in the environment: A focus on mixtures
The real world is marked by multiple stressors, among them cocktails of chemicals.
Rubber in the environment
The tread on the tyre is worn out, new tyres are needed.
Read More: Environment News and Environment Current Events
Brightsurf.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.