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Subcommittee Charge FY 98/99
Harnessing the Influence of the Financial Services Industry To Promote Environmentally Sound Business Practices Through Environmental Management Systems
Over the past several years, the financial services industry has become more interested in environmental issues--initially as a defense against possible liabilities, but more recently out of a recognition that an individual firm's environmental management practices may serve as an indicator of risk--and therefore potential profitability--when considering the financial needs of that firm. This growing interest was reflected in a United Nations Environmental Program (UNEP) conference that was held last May in New York City which convened over two hundred international financiers to assess the relationship between environmental performance and financial performance.As part of its overall effort to improve the environmental performance of different sectors and industries, the Office of Pollution Prevention and Toxics (OPPT) recently supported a formal dialogue among representatives from commercial banks, investment banks, and Federal bank regulatory agencies (the FED, FDIC, and OCC) on the potential utility of using the ISO-14001 Environmental Management Standard as an investment screen. One of the key findings from this dialogue was that the financial community sees potential value in using a firm's environmental management practices as criteria in evaluating the financial exposure of that firm, but that standard measures do not currently exist to translate environmental performance into probable financial performance.
The NACEPT Environmental Capital Markets Committee will build upon this effort, in partnership with OR, OECA, OPPT, EFAB and other Offices in the Agency, to identify practical ways for the financial services industry to include the environmental performance of its clients as an integral part of its core credit, investment, and underwriting processes. Some of the major issues the Committee would address are:
The extent to which--and why--the financial services industry currently takes environmental factors into account in its credit, investment, and underwriting processes.
The characteristics of current (and projected) environmental management systems (EMSs) and practices that could help correlate environmental performance and financial performance.
How information flowing from these EMSs/practices might be quantified in a manner that could be integrated into the financial service industry's credit, investment, and underwriting processes.
The ultimate goal of the Committee would be to identify concrete actions that EPA, on its own or in cooperation with other Federal or state agencies, could take to help the financial services industry incorporate this environmental information into its core decision-making processes.