title: Incorporation of Environmental Issues into Banks’ Lending Decisions

authors: Mazahrih, Basman Jalal Saeed

subjects: lending decisions

abstract: This thesis examines commercial banks’ practice pertaining to the integration of environmental issues into their lending activities. There is evidence that over the last few decades some banks have considered the environmental impact of borrower activities as part of credit risk assessment and management. A number of academic surveys have identified a positive correlation between the environmental and financial performance of companies. These developments influence the level of bank support for responsible environmental management. For most commercial banks loans are a large percentage of assets. Hence appropriate management of loans is a priority for bank management, shareholders and other interested people. Traditionally, banks use financial instruments to measure the efficiency of their lending decisions and to ensure that payments are made on time. However, each lending operation may involve environmental risks. Adverse environmental outcomes may result in a reduction in the borrowers’ repayment capacity, a decline in the value of the collateral, a direct bank liability for environmental damage caused by its borrowing clients and potential risks to the bank’s reputation. For each of these risks the bank can determine the likelihood, extent, cost and impact should the damage actually occur. Bank lending occurs in a wider economic and social context of strategic importance for banks. Society’s quest for sustainable development involves the creation of new financing markets, such as markets for sustainable energy, water purification equipment, products for the financing of companies’ climate policies and groundbreaking technology. Banks can fulfil the role of a traditional financial intermediary or can step into this growing market to develop specific new products such as environmental loans. This market is rich in challenges and opportunities. Hence, it is crucial that banks have appropriate indicators to help them and stakeholders monitor performance. Against this background, this study investigates the practice of incorporating environmental issues into banks’ lending decisions, utilizing Westpac as a case study. Qualitative and quantitative research approaches were adopted. A mixed method of data collection was used, consisting of an analysis of annual reports, semi-structured interview and a survey questionnaire. The Westpac study is used to develop and test an environmental sustainability framework to analyse the incorporation of environmental issues into lending decisions by financial institutions. The results from the research provide some evidence that Westpac incorporates environmental issues into lending decisions and is aware of environmental risks and opportunities. At the operational level, the bank assesses environmental risks before approving loans and finances projects with high environmental benefits. With regard to motivational drivers, the findings indicate that the bank’s incorporation of environmental issues into lending decisions is motivated by multiple reasons: managerial, financial and environmental. However, the environmental information reported was not consistently and sufficiently communicated to stakeholders. Further, the results from the research reveal that bank management should effectively consider environmental issues when making lending decisions and that they should take specific actions to have such issues effectively implemented. Although banks are motivated by a variety of factors, financial issues were considered the most important factor when banks are making lending decisions. This study also reveals that respondents did not know about bank effectiveness in addressing environmental issues when making lending decisions. Moreover, people who are likely to be better informed or knowledgeable about environmental issues were also found to have a low level of knowledge in this regard. Furthermore, the majority of respondents tend not to be satisfied with the interaction between banks and both the public and the New Zealand government. The literature to date suggests there is increasing stakeholder pressure on businesses to act with environmental responsibility, but this result suggests challenges still remain. A comparison of Westpac and HSBC stakeholder reports revealed that HSBC provided more appropriate environmental information than Westpac regarding their lending activities. The comparison reveals that there is a shift in how banks view the consideration of environmental performance as material to users of the annual reports. However, there is a gap in the information provided probably due to the voluntary nature of sustainability disclosures in annual reports. Thus, there is a need for improvement relating to the content and quality of environmental reporting. This research proposes an environmental sustainability framework, with specific focus on the lending process as a guideline for bank management, policy makers and other interested people. It facilitates effective measurement of environmental performance in two major areas: management and operations, and motivations. The framework includes indicators and processes to improve bank financial and environmental performance. The key findings of this study are instructive. Consideration of environmental issues when making lending decisions is important to banks, borrowers, the environment and stakeholders in general. Environmental risks, opportunities and the positive relationship between the environmental performance and financial performance give motivation to integrate environmental issues into lending activities. This study identified that Westpac and commercial banks more generally have an opportunity to provide further and consistent evidence concerning their managerial and operational performance and drivers when making lending decisions. Such actions would provide stakeholders with more accurate views on the bank’s environmental performance. It would also facilitate the bank’s ability to respond sufficiently and transparently to the international agreements and initiatives the bank is signatory to and/or a member of.

text: Incorporation of Environmental Issues into Banks’ Lending Decisions This thesis examines commercial banks’ practice pertaining to the integration of environmental issues into their lending activities. There is evidence that over the last few decades some banks have considered the environmental impact of borrower activities as part of credit risk assessment and management. A number of academic surveys have identified a positive correlation between the environmental and financial performance of companies. These developments influence the level of bank support for responsible environmental management. For most commercial banks loans are a large percentage of assets. Hence appropriate management of loans is a priority for bank management, shareholders and other interested people. Traditionally, banks use financial instruments to measure the efficiency of their lending decisions and to ensure that payments are made on time. However, each lending operation may involve environmental risks. Adverse environmental outcomes may result in a reduction in the borrowers’ repayment capacity, a decline in the value of the collateral, a direct bank liability for environmental damage caused by its borrowing clients and potential risks to the bank’s reputation. For each of these risks the bank can determine the likelihood, extent, cost and impact should the damage actually occur. Bank lending occurs in a wider economic and social context of strategic importance for banks. Society’s quest for sustainable development involves the creation of new financing markets, such as markets for sustainable energy, water purification equipment, products for the financing of companies’ climate policies and groundbreaking technology. Banks can fulfil the role of a traditional financial intermediary or can step into this growing market to develop specific new products such as environmental loans. This market is rich in challenges and opportunities. Hence, it is crucial that banks have appropriate indicators to help them and stakeholders monitor performance. Against this background, this study investigates the practice of incorporating environmental issues into banks’ lending decisions, utilizing Westpac as a case study. Qualitative and quantitative research approaches were adopted. A mixed method of data collection was used, consisting of an analysis of annual reports, semi-structured interview and a survey questionnaire. The Westpac study is used to develop and test an environmental sustainability framework to analyse the incorporation of environmental issues into lending decisions by financial institutions. The results from the research provide some evidence that Westpac incorporates environmental issues into lending decisions and is aware of environmental risks and opportunities. At the operational level, the bank assesses environmental risks before approving loans and finances projects with high environmental benefits. With regard to motivational drivers, the findings indicate that the bank’s incorporation of environmental issues into lending decisions is motivated by multiple reasons: managerial, financial and environmental. However, the environmental information reported was not consistently and sufficiently communicated to stakeholders. Further, the results from the research reveal that bank management should effectively consider environmental issues when making lending decisions and that they should take specific actions to have such issues effectively implemented. Although banks are motivated by a variety of factors, financial issues were considered the most important factor when banks are making lending decisions. This study also reveals that respondents did not know about bank effectiveness in addressing environmental issues when making lending decisions. Moreover, people who are likely to be better informed or knowledgeable about environmental issues were also found to have a low level of knowledge in this regard. Furthermore, the majority of respondents tend not to be satisfied with the interaction between banks and both the public and the New Zealand government. The literature to date suggests there is increasing stakeholder pressure on businesses to act with environmental responsibility, but this result suggests challenges still remain. A comparison of Westpac and HSBC stakeholder reports revealed that HSBC provided more appropriate environmental information than Westpac regarding their lending activities. The comparison reveals that there is a shift in how banks view the consideration of environmental performance as material to users of the annual reports. However, there is a gap in the information provided probably due to the voluntary nature of sustainability disclosures in annual reports. Thus, there is a need for improvement relating to the content and quality of environmental reporting. This research proposes an environmental sustainability framework, with specific focus on the lending process as a guideline for bank management, policy makers and other interested people. It facilitates effective measurement of environmental performance in two major areas: management and operations, and motivations. The framework includes indicators and processes to improve bank financial and environmental performance. The key findings of this study are instructive. Consideration of environmental issues when making lending decisions is important to banks, borrowers, the environment and stakeholders in general. Environmental risks, opportunities and the positive relationship between the environmental performance and financial performance give motivation to integrate environmental issues into lending activities. This study identified that Westpac and commercial banks more generally have an opportunity to provide further and consistent evidence concerning their managerial and operational performance and drivers when making lending decisions. Such actions would provide stakeholders with more accurate views on the bank’s environmental performance. It would also facilitate the bank’s ability to respond sufficiently and transparently to the international agreements and initiatives the bank is signatory to and/or a member of.

year: 2011

title: Characterisation of porcelain enamel coatings

authors: Henderson, Matthew Neil

abstract: This thesis focuses on the structural and compositional characterisation and corrosion performance of porcelain enamel coatings commonly used on metal substrates for protective and decorative purposes. These characteristics need to be better understood so the coatings remain competitive with alternative surface treatments/finishes. Raman and infrared spectroscopic techniques were used together, for the first time, to investigate porcelain enamel coatings. Five commercial porcelain coatings and their component raw materials were examined. In addition, the more conventional techniques for analysing porcelain enamels - EDS, ICP and XRD, were used. This complement of techniques makes this a unique and comprehensive study of enamel coatings. The effect of compositional changes on corrosion characteristics of porcelain enamels was then investigated using model formulations. Composition diagrams were constructed and used to explain acid and/or alkali attack on the commercial coatings.

Spectroscopic investigations showed that porcelain enamels are complex systems incorporating many different amorphous and crystalline phases. The main compounds in the frit samples investigated were silicates and borates. Si-O and Si-O-Si vibrations characteristic of SiO₄ tetrahedra were found both in the Raman and IR spectra. However, only the IR technique was capable of identifying the B-O bonds associated with B₂O₃. Amorphous silica was confirmed by XRD analysis. Amorphous phases and crystalline compounds were found within the fired glass enamel coatings. These were characterised by vibrational spectroscopy and XRD. The dominant compounds in the amorphous phase are borates and silicates as in the case of the frits. These compounds were identified through the presence of B-O-Si, Si-O-Si and B-O stretching modes in the Raman spectra. The ATR-IR spectrum of the coatings, which are surface specific, is dominated by B-O stretching modes suggesting that borates were at the coating surface. Many of the crystalline phases in the fired enamel coating detected by XRD and vibrational spectroscopic analysis including FeCr₂O₄, Cr₂O₃ and SiO₂ matched those in the colouring pigments.

Corrosion of the enamel coatings was examined in terms of their solid matter (destruction of glass network) as well as their heterogeneity (presence and nature of bubbles in coatings). Composition diagrams developed for porcelain enamel coating systems were useful for correlating the phases in the glass matrix with specific properties to help explain coating corrosion performance. Varying the ratio of glass network formers and modifiers changed the structural properties of the coating and hence, its corrosion performance. Enamels with higher SiO₂ content, but similar modifier to R₂O₃ ratios were more resistant to corrosion because more compact silicate tetrahedra were formed. This decreased the number of non-bridging oxygen atoms in the structure, thereby reducing ion exchange between modifier ions in the coating and hydrogen ions in the solution.

There was a general trend for increased corrosion to be correlated with increased bubble area in the top 20 μm of coating. By contrast, there was no correlation between the bubble area over the entire depth of the coatings and weight loss after acid or alkali exposure. This is attributed to the formation of a barrier when the coating is exposed to acids, thus inhibiting further ion diffusion, which consequently retards further corrosion. This indicates that the upper bubble area rather than the total bubble area through the coating depth is an important factor in chemical resistance.

The information from EDS analyses of crystalline phases in the gloss green A coating, including spectra around pinhole defects, were expanded with Raman microscopy data. Raman spectra of a cross-section indicate α-Cr₂O₃ and α-quartz whereas the pinhole defect had only α-Cr₂O₃. Elemental mapping showed that elemental Cr clusters were in small discrete areas, with greater concentrations around the margin of the pinhole defect.

This study demonstrates the usefulness of Raman and IR in extending the understanding of porcelain enamel coatings. Using the set of techniques - Raman, IR, ICP, EDS and XRD - together, provided structural and compositional information, which can help improve the coating performance and the finish quality of enamel coatings. Composition diagrams developed from the ICP analytical information are very useful for developing coatings with better chemical resistance from optimised oxide ratios.

text: Characterisation of porcelain enamel coatings This thesis focuses on the structural and compositional characterisation and corrosion performance of porcelain enamel coatings commonly used on metal substrates for protective and decorative purposes. These characteristics need to be better understood so the coatings remain competitive with alternative surface treatments/finishes. Raman and infrared spectroscopic techniques were used together, for the first time, to investigate porcelain enamel coatings. Five commercial porcelain coatings and their component raw materials were examined. In addition, the more conventional techniques for analysing porcelain enamels - EDS, ICP and XRD, were used. This complement of techniques makes this a unique and comprehensive study of enamel coatings. The effect of compositional changes on corrosion characteristics of porcelain enamels was then investigated using model formulations. Composition diagrams were constructed and used to explain acid and/or alkali attack on the commercial coatings.

Spectroscopic investigations showed that porcelain enamels are complex systems incorporating many different amorphous and crystalline phases. The main compounds in the frit samples investigated were silicates and borates. Si-O and Si-O-Si vibrations characteristic of SiO₄ tetrahedra were found both in the Raman and IR spectra. However, only the IR technique was capable of identifying the B-O bonds associated with B₂O₃. Amorphous silica was confirmed by XRD analysis. Amorphous phases and crystalline compounds were found within the fired glass enamel coatings. These were characterised by vibrational spectroscopy and XRD. The dominant compounds in the amorphous phase are borates and silicates as in the case of the frits. These compounds were identified through the presence of B-O-Si, Si-O-Si and B-O stretching modes in the Raman spectra. The ATR-IR spectrum of the coatings, which are surface specific, is dominated by B-O stretching modes suggesting that borates were at the coating surface. Many of the crystalline phases in the fired enamel coating detected by XRD and vibrational spectroscopic analysis including FeCr₂O₄, Cr₂O₃ and SiO₂ matched those in the colouring pigments.

Corrosion of the enamel coatings was examined in terms of their solid matter (destruction of glass network) as well as their heterogeneity (presence and nature of bubbles in coatings). Composition diagrams developed for porcelain enamel coating systems were useful for correlating the phases in the glass matrix with specific properties to help explain coating corrosion performance. Varying the ratio of glass network formers and modifiers changed the structural properties of the coating and hence, its corrosion performance. Enamels with higher SiO₂ content, but similar modifier to R₂O₃ ratios were more resistant to corrosion because more compact silicate tetrahedra were formed. This decreased the number of non-bridging oxygen atoms in the structure, thereby reducing ion exchange between modifier ions in the coating and hydrogen ions in the solution.

There was a general trend for increased corrosion to be correlated with increased bubble area in the top 20 μm of coating. By contrast, there was no correlation between the bubble area over the entire depth of the coatings and weight loss after acid or alkali exposure. This is attributed to the formation of a barrier when the coating is exposed to acids, thus inhibiting further ion diffusion, which consequently retards further corrosion. This indicates that the upper bubble area rather than the total bubble area through the coating depth is an important factor in chemical resistance.

The information from EDS analyses of crystalline phases in the gloss green A coating, including spectra around pinhole defects, were expanded with Raman microscopy data. Raman spectra of a cross-section indicate α-Cr₂O₃ and α-quartz whereas the pinhole defect had only α-Cr₂O₃. Elemental mapping showed that elemental Cr clusters were in small discrete areas, with greater concentrations around the margin of the pinhole defect.

This study demonstrates the usefulness of Raman and IR in extending the understanding of porcelain enamel coatings. Using the set of techniques - Raman, IR, ICP, EDS and XRD - together, provided structural and compositional information, which can help improve the coating performance and the finish quality of enamel coatings. Composition diagrams developed from the ICP analytical information are very useful for developing coatings with better chemical resistance from optimised oxide ratios.

year: 2002

title: The Aroha block to 1879

authors: Hart, Philip

abstract: Te Aroha was valued by Maori because of its strategic position as well as its healing hot springs, while Pakeha anticipated acquiring a large area (which shrank in size once surveyed) of fertile farming land. Before the Crown could acquire the block, the ownership of a disputed area fought over by the Marutuahu tribes (especially Ngati Maru) and Ngati Haua had to be determined. After the battle of Taumatawiwi of 1830, claimed as a victory by both sides, subsequent smaller battles continued for some years. In place of deciding ownership on this basis, the new land court struggled to make a judgment on the basis of  contradictory claims about ancestry, battles large and small, and occupation.
One part of the larger Aroha block, Ruakaka, was considered separately in 1869, resulting in the court allocating it to Ngati Haua. Also in that year, the first hearing of the Aroha Block was held, at Matamata, with the same outcome. Because of Maratuahu anger and threats of violence, Ngati Haua failed to survey the land as required, and a second hearing was held in Auckland, in 1871, at which Ngati Maru triumphed. Subsequently the block was occupied, but conflicts continued, notably when Ngati Haua gave a Pakeha permission to run cattle at Waiharakeke, further upriver. 
Starting in 1873, James Mackay slowly purchased the interests of individuals claiming ownership of the block, and paid off the Ngati Haua claimants. Then in December 1876, Ngati Tumutumu/Ngati Rahiri claimed the land for themselves, and in the following year the ownership of the Waitoki block, downstream from Te Aroha, was contested. In July 1878, a third hearing of the Aroha case commenced, resulting in Ngati Rahiri being allocated £3,000 and 7,500 acres, the remainder of the block going to Ngati Maru. Subsequently, the process of subdividing the owners’ interests proceeded, very slowly, and a small number of Pakeha settled and commenced farming or storekeeping.

text: The Aroha block to 1879 Te Aroha was valued by Maori because of its strategic position as well as its healing hot springs, while Pakeha anticipated acquiring a large area (which shrank in size once surveyed) of fertile farming land. Before the Crown could acquire the block, the ownership of a disputed area fought over by the Marutuahu tribes (especially Ngati Maru) and Ngati Haua had to be determined. After the battle of Taumatawiwi of 1830, claimed as a victory by both sides, subsequent smaller battles continued for some years. In place of deciding ownership on this basis, the new land court struggled to make a judgment on the basis of  contradictory claims about ancestry, battles large and small, and occupation.
One part of the larger Aroha block, Ruakaka, was considered separately in 1869, resulting in the court allocating it to Ngati Haua. Also in that year, the first hearing of the Aroha Block was held, at Matamata, with the same outcome. Because of Maratuahu anger and threats of violence, Ngati Haua failed to survey the land as required, and a second hearing was held in Auckland, in 1871, at which Ngati Maru triumphed. Subsequently the block was occupied, but conflicts continued, notably when Ngati Haua gave a Pakeha permission to run cattle at Waiharakeke, further upriver. 
Starting in 1873, James Mackay slowly purchased the interests of individuals claiming ownership of the block, and paid off the Ngati Haua claimants. Then in December 1876, Ngati Tumutumu/Ngati Rahiri claimed the land for themselves, and in the following year the ownership of the Waitoki block, downstream from Te Aroha, was contested. In July 1878, a third hearing of the Aroha case commenced, resulting in Ngati Rahiri being allocated £3,000 and 7,500 acres, the remainder of the block going to Ngati Maru. Subsequently, the process of subdividing the owners’ interests proceeded, very slowly, and a small number of Pakeha settled and commenced farming or storekeeping.

year: 2016