Corporate environmental responsiveness and the New Zealand banking industry

Abstract

What could cause improvements in the attitudes and actions of corporations polluting New Zealand's environment? The literature and advocates for conservation of the environment have suggested regulatory, buyer and societal pressures could bring these changes about. Subsequently, much effort has gone into lobbying governments for legislative changes and educating the public about corporate processes and products that harm the environment. Less attention has been given to how 'supplier' pressure, such as that from banks (as suppliers of finance to corporates), could act as a collective force to influence in a positive way those businesses whose operations impact negatively on the natural environment. The results of this interview-based study indicate that although New Zealand banks have incorporated environmental issues into some of their risk management policies and, while there is potential for banks to provide a powerful influence affecting corporate environmental responsiveness, this does not happen primarily because it is not required in the legislation governing the banking industry in New Zealand. The study concludes with implications for policy makers: (1) the proposed 'secured lender defence' may not achieve what its promoters believe it can, (2) the legal definition of 'active management' should be refined, and (3) the Reserve Bank Act could be investigated for amendment to place a duty on the Reserve Bank to require environmental lending policies of every bank operating in New Zealand.