The Impact of Cooperative Control Regulations for the Assessment of Environmental and Social Risk

Abstract

Cooperative financial institutions operate under general cooperative principles, with a vision for economic, social, and environmental balance. In Ecuador, this model of finance gained momentum in 2012 with the creation of the superintendence of the social and solidarity economy, which regulates the country's cooperative sector. This research focuses on segment one, institutions with assets greater than $80 million. Currently, developments in the environmental area, or green finance, fall under the control standard for the management of environmental and social risk in savings and credit cooperatives and mutualists. The regulation provides the guidelines for implementing the social environmental risk management system (SARAS), which classifies risk based on the environmental impact of economic activities. It also includes a list of activities of activities excluded from financial services due to their negative implications for the social and environmental areas. This research analyzes and critiques the aspects, requirements, and conditions of the implementation of these regulations.