Purpose – The purpose of this research is to develop a complex approach for assessment of environmental risks which includes 1) additional phases of lending process for examining environmental issues; 2) a model for assessment of environmental risk. Design/methodology/approach – In order to achieve the aim of this research, the authors performed qualitative analysis of: 1) scientific literature in the field of environmental risk assessment; 2) good practice of several banks in the field of environmental risk assessment, such as: Bank Austria, Ceska Sporitelna, Bank of Georgia; and 3) information about the three Latvian commercial banks, which is publicly available from their home pages and banks’ internal documentation and procedures. Findings – The authors came to a conclusion that banks, which implement the procedure of environmental risk assessment, do it formally, and after the lending decision has been taken, no further monitoring is performed, thus exposing the image and reputation of the bank to the environmental risks. Therefore, it is even more important to determine lending criteria considering the issues of environmental risks and to implement further monitoring of risks until the termination of the lending agreement. Research limitations/implications – Limited access to publicly available information about procedures of environmental risk assessment in banks. Originality/value –The lending assessment approach developed by the authors will play an important role in lending decision making process in commercial banks.