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unenvironment-250ccb5b11795e74a5ac3cd45a24f0e9

Lenders and Investors Environmental Liability: How Much is Too Much?

Flag for IGO United Nations Environment Programme on October 11th 2016
This working paper presents an overview of Lender Environmental Liability (LEL) and Investor Environmental Liability (IEL) regimes and issues. Environmental harm and degradation is often irreparable. Therefore, our assumption is that precaution is the main objective of any international and domestic environmental legal regime. The paper explores the conditions under which LEL/IEL can be effective tool to promote precaution. To illustrate our premise, we created a model based on Nash’s game theory in an attempt to universalize some basic concepts in the design of these systems. By using Nash’s game theory we aim to answer the question presented in the title of our paper: how much is too much environmental liability for a financial institution to bear? We argue that full environmental liability (where financial institutions bear unlimited liability) may have the perverse effect of incentivising them to internalize any duty of care, in case they bear full liability. - See more at: http://unepinquiry.org/p...

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Cited by 8 other policy documents (2 of them are from other policy sources)