Abstract:

Purpose – The purpose of this research is to create the environmental risks assessment complex approach which includes the phases for examining the lending application; creating the environmental risk assessment model; on the bases of the NACE codes of industry classification the environmental risks were divide in to categories; improving the environmental risk assessment form. 

Design/methodology/approach – To achieve the results of the research the authors were carried out a qualitative analysis: of scientific literature in environmental risks assessment; other banks good practices such as Bank Austria, Ceska Sporitelna, Bank of Georgia; information about the three Latvian commercial banks publicly available from their home pages and banks’ internal documentation and procedures.

Findings – During the research the authors came to a conclusion that banks, which are performing the environmental risks assessment, pay only a formal attention to that and after the lending decision is taken no meaning is given any longer to that as well as the further monitoring is not performed, thus exposing the image and reputation of the bank to the environmental risks. Therefore it is even more important to develop the assessment of lending criterions in relation to the issues of environmental risks and quality further monitoring of them until the end of lending liabilities. 

Research limitations/implications – The lending assessment mechanism developed by the authors will take an important role in further lending decision making process in each of the commercial banks.

Originality/value – The authors developed and proposed environmental risk assessment complex will be an important part for the future lending decisions making in every one commercial bank for environmental risks assessment, especially in Latvia.