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Sustainability and Financing Risks
INTRODUCTION
Efforts devoted to sustainable development and environmental management are accompanied by many opportunities and challenges for banks. Due to these efforts every lending operation, financing transaction or equity investment may also involve environmental risks for the bank. Roughly speaking, such risks can develop in three ways. Firstly, they can result from financial risks associated with the client's continuity problems. In this case, a distinction can be made between a reduction in the borrowing client's repayment capacity and a decline in the value of his collateral due to environmental issues. Secondly, such risks can develop due to a bank's direct liability for environmental damage caused ...
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