A group of bankers and institutional investors will come together this week to start developing a set of best practice guidelines for assessing and managing environmental risk. The Environmental Bankers Association of Australasia will hold a roundtable in Sydney on Friday at which bankers and investors will meet regulators.One of the regulators attending will be Paul Vogel, the chairman of the Environmental Protection Authority, Western Australia. Vogel said there was a gap in the knowledge of most financial institutions when it came to dealing with environmental risk.Vogel said financial institutions had been involved in their share of horror stories over the years, such as that concerning the Brooklands Green estate, in Cranbourne outside Melbourne, but had yet to develop systems and capabilities that would allow them to understand their risks and avoid exposing themselves.Brooklands Green was built on landfill that started releasing high levels of methane gas. Last year, residents were awarded a A$17.5 million settlement to compensate them for the loss in value of their properties.Vogel said environmental risk was a complex area that was made more difficult by the fact that the various state environmental protection agencies and authorities worked differently. "Some, like ours, limit their activity to environmental impact assessments, while in other states they act as regulators," said Vogel."We need to be transparent about what we can deliver to financial institutions and how we can help them avoid getting burnt."The EBAA, which is a chapter of the Environmental Bankers Association of the United States, has been in existence for about 18 months. It has 14 members.One of the group's aims is to develop best practice standards in the environmental risk area and to encourage small financial institutions to adopt these standards. While big banks and institutional investors have adopted environmental risk frameworks, such as the Equator Principles, the trend is not widespread.