How do bank loans affect the environment and the communities in which the loan recipients operate? SMU’s Sim Kee Boon Institute recently concluded a pilot project for DBS Bank, together with the Netherlands’ Impact Institute, in this emerging area of “impact measurement.” Challenges for impact measurement include the subjectivity of scope and criteria, as well as lack of consistency across different rating agencies and data providers. Nevertheless, we find the DBS pilot, that looks at palm oil and electric vehicles, a very worthwhile step toward a consolidated approach to assessing the broader impact of bank loans.
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