Banking and finance transactions

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Banking and finance and environmental issues

Banks and other commercial lenders must consider environmental, climate change and sustainability issues and risks, both when formulating and applying their lending policy and in the conduct of their business. Lending decisions in relation to large-scale or long-term projects (eg infrastructure or real estate) must take account of factors such as projected climate change impacts and the capital and operational costs arising from new and enhanced regulation.

Lending decisions in relation to corporate and commercial transactions (eg share purchase, mergers or acquisitions) must include adequate assessment of the target's actual or contingent environmental risks and liabilities. These include:

  1. •

    potential impact on the value of assets (eg remediation or other clean-up costs)

  2. •

    operational risks (eg suspension or revocation of an environmental permit or other necessary licence)

  3. •

    reputational risks (eg pollution incidents or perception of poor environmental or sustainability performance adversely affecting share prices)

The interaction of direct and reputational risks, and at least a short-term risk of adverse impact on value, was evident on a large scale following the Deepwater Horizon explosion and oil spill in ...

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Latest Environment News

ECHA adds three new substances to EU REACH Candidate List

The European Chemicals Agency (ECHA) has expanded the Candidate List of substances of very high concern (SVHCs) by adding three hazardous chemicals, bringing the total number of entries to 250. Notably, two of the newly added chemicals are classified as very persistent and very bioaccumulative (vPvB) and are used in cosmetics, personal care, and automotive care products. The third chemical, used in textile treatment products and dyes, is toxic for reproduction.

Government launches three consultations to modernise the UK sustainability reporting framework

The government has launched three consultations as part of its efforts to modernise the UK’s sustainability reporting framework. The consultations seek views on: (1) implementing the government’s commitment to transition planning, to support market investment in sectors that will drive the clean energy superpower mission; (2) exposure drafts of the UK Sustainability Reporting Standards (SRS), which aim to provide clear and comparable information for investors on sustainability-related financial risks and opportunities; and (3) establishing a voluntary registration regime for providers of sustainability assurance. All consultations will close on 17 September 2025.

ISDA and AFME publish joint position paper on SFDR review priorities

The International Swaps and Derivatives Association (ISDA) and the Association for Financial Markets in Europe (AFME) have released a joint position paper addressing the review of the Sustainable Finance Disclosure Regulation (SFDR). The paper outlines five key priorities for revision, including: streamlining disclosure requirements, transitioning to new product categorisation, aligning with other regulations, standardising derivatives treatment, and incorporating structured products consideration. The proposals aim to address implementation challenges while maintaining alignment with EU sustainable finance framework objectives.

Council adopts position on EU Forest Monitoring Act

The Council of the EU has adopted its position on the proposed EU Forest Monitoring Act, which aims to support the sustainable management and resilience of forests. As part of the EU forest strategy for 2030, the Act seeks to establish a harmonised monitoring system in cooperation with member states to improve the availability and comparability of forest data and facilitate data sharing across the EU. It is intended to support informed decision-making by forest managers and policymakers. The revised framework aims to strike a balance between harmonising data at the EU level and preserving the flexibility needed to reflect national circumstances. The Council has simplified the original proposal to reduce administrative burdens and is ready to begin negotiations with the European Parliament.

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