Environmental management accounting (EMA) implementation challenges within supply chain management systems (SCMSs) and environmental awareness in emerging economies should be addressed for sustainable development. Therefore, this study explores EMA implementation challenges in the supply chain in manufacturing to propose a framework to guide manufacturing companies to achieve a cleaner production chain. After conducting an extensive literature review on literature related to EMA in developing countries, challenges characterising EMA implementation have been identified. These include incoherent government policies and regulations; unavailability of resources; technological incapability; inadequate training and expertise; allocation of environmental costs; and environmental reporting. Hence, it is suggested that manufacturing companies must understand the financial and environmental benefits of achieving cleaner production through implementing EMA. Managers can make more environmentally friendly decisions based on their supply chain using the developed framework. Regulators may need key regulatory framework reforms and policies to monitor and assess environmental compliance throughout the supply chain. Longitudinal and quantitative data from manufacturing companies in developing countries are suggested to validate the existence of EMA implementation challenges.
Basel III, a regulatory reform, aimed at strengthening the financial resilience of banks and the commensurate stability of the financial sector, has the potential to slow down revenue generation capacity of the same banks that it intends to strengthen and stabilize. We demonstrate the viability of using the risk-weights as espoused in risk-weighted assets (RWA) to generate non-interest revenue through fees based on deliberate cancellation of insurance on physical assets held by borrowers during the tenure of the loan. Instead of employing the risk-weights to determine the quantities of capital required, we deploy them in an effort to generate proportionate fees that can serve to alleviate banks from the downward pressure on net income emanating from the application of Basel III regulatory pillars-Capital adequacy, liquidity requirement and the leverage ceiling. We document and illuminate the requirements and the massive income resulting in categorizing assets in terms of their risk weights in order to determine fees associated with monthly cancellations or lapse of insurance contracts that are meant to provide mitigation measures for the protection of those assets.
Global banks face a predicament amidst the dictates of IFRS9 accounting policies. Commencing in 2018, incurred losses plus expected losses are to be reported. Loss allowances on loans and advances should be set aside earlier and should therefore be higher than they would be pursuant to the impairment provisions of IAS39. This paper focused on a sample of the top 40 European banks by assets and assessed the transition from IAS39 to IFRS9 through panel data distinguishing credit risk allowances over distinct IAS39 and IFRS9 periods. Economic climate damage data was obtained from the European environmental agency website, and incurred losses as well as expected credit losses data was fetched from annual financial reports. A null hypothesis indicating that banks had lesser or equal IAS39 incurred losses than IFRS9 expected credit losses was tested and rejected. The relationship between economic damages and estimates of credit losses was investigated using a two-sample t-test and Pearson productmoment correlation. Results revealed that banks have been conservative in estimating credit losses since adopting IFRS9. Consequently, the paper contributes in revealing to banks the need to proactively account for climate damages in the wake of IFRS9. It prompts shareholders to incorporate economic climate-induced damages in risk/return decisions.
Banks are exposed to climate risks through stranded assets. This risk can be substantial in the banking sector, as it can spawn systemic risk. After the Great Recession, macro-prudential instruments effectively addressed systemic risk. However, climatic risks raise the research question of how feasible it is to address them by adopting macro-prudential instruments. The researchers, therefore, investigate how banks can respond to the risk posed by stranded assets through the framework of using macro-prudential instruments. A semi-systematic review of the related literature is carried out based on the researchers’ aim to evaluate theory evidence in the effectiveness of macro-prudential instruments in addressing climate-related risks. The adaptability of macro-prudential instruments to address climatic risks and, by implication, systemic risk is demonstrated in the findings. The researchers develop a framework constituting climate transparency disclosures, climate capital requirement ratio, climate capital conservation, carbon countercyclical buffer and macro-prudential climate stress tests to mitigate the effects of climate risks in banking.
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