Does a commercial debtor's economic, environmental and social performance in terms of sustainability affect its credit risk rating? Does adding criteria aimed at assessing a lender's environmental, social or sustainability practices provide added value to traditional fi nancial rating criteria? Many analyses have reported that a correlation exists between companies' environmental and their fi nancial performance. We checked out the assertion that it 'pays to be sustainable' by analyzing the role that criteria pertaining to sustainability and environmental orientation play in the commercial credit risk management process. Our results show that sustainability criteria can be used to predict the fi nancial performance of a debtor and improve the predictive validity of the credit rating process. We conclude that the sustainability a fi rm demonstrates infl uences its creditworthiness as part of its fi nancial performance.

Purpose -This paper analyses the connection between the sustainability performance of Chinese banks and their financial indicators to explore whether sustainability regulations can be implemented without decreasing the financial performance of the banking sector.Design/methodology/approach -The study examined reports and websites of Chinese banks, categorized different corporate sustainability aspects, and conducted panel regression and Granger causality to analyse cause and effect variables.Findings -The environmental and social performance of Chinese banks increased significantly between 2009 and 2013. Furthermore, a bi-directional causality between financial performance and sustainability performance of Chinese banks has been found. Based on institutional theory, this interaction may be influenced by the Chinese Green Credit Policy.Research limitations/implications -The findings suggest that corporate sustainability performance and financial performance are not a trade-off but correlate positively. Further research is needed to analyse the effect of financial regulations, such as the Chinese Green Credit Policy.Practical implications -According to the good management theory by Waddock and Graves (1997) that claims a positive impact of corporate social performance on financial performance, Chinese banks can invest in corporate sustainability to increase their financial success and reinvest parts of the additional returns -also called slack resources -in sustainability activities.Social implications -Chinese banks are able to influence the economy to become greener and less polluting without sacrificing financial returns.Originality/value -To the best of our knowledge, this is the first study to explore the sustainability performance of Chinese banks, including their products and services.

What is the current state of environmental, social and governance (ESG) reporting and what is the relation between ESG reporting and the financial performance of Chinese companies? This study analyses corporate ESG disclosure in China between 2005 and 2012 by analysing the members of the main indexes of the biggest Chinese stock exchanges. After discussing theories that explain the ESG performance of firms such as institutional theory, accountability and stakeholder theory we present uni‐ and multivariate statistical analyses of ESG reporting and its relation to environmental and financial performance. Our results suggest that ownership status and membership of certain stock exchanges influence the frequency of ESG disclosure. In turn, ESG reporting influences both environmental and financial performance. We conclude that the main driver for ESG disclosure is accountability and that Chinese corporations are catching up with respect to the frequency of ESG reporting as well as with respect to the quality. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment

How do Canadian banks integrate environmental risks into corporate lending and where are they located compared with their global peers? In this paper we report a mixed method analysis of the integration of environmental risks into the credit management. The qualitative and quantitative analyses suggest that all analyzed Canadian commercial banks, credit unions and Export Development Canada manage environmental risks in credit management to avoid financial risks. Some of the institutions even connect environmental and sustainability issues with their general business strategies. Compared with other countries, Canadian banks are best in class, as all six Canadian commercial banks, comprising over 90 percent of Canadian assets, systematically examine environmental risks for credits, loans and mortgages. We conclude that Canadian banks are proactive regarding environmental examinations of loans and that there is a need for a more accountancy related reporting on environmental risk management in financial institutions. Further research is needed to be able to calculate costs and benefits of integrating environmental and sustainability issues into the credit risk management. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.