SUSTAINABLE FINANCE AND BANKING: A CHALLENGE FOR REGULATORS AND A RISK MANAGEMENT SYSTEM

Mirjana Jemović, Jelena Radojičić

DOI Number
https://doi.org/10.22190/FUEO210609024J
First page
341
Last page
356

Abstract


The key position of banks in the financial sector, as well as their indisputable role in financing economic development, have conditioned the need to consider their impact on the environment. The implementation of the concept of sustainability in banking has conditioned the transformation of banks in the direction of their greater corporate eco-efficiency and the development of banking products and services that contribute to sustainable development. Sustainable finance for banks is a source of new opportunities, but on the other hand, banks are more and more concerned about their exposure to environmental risk. Recognizing the impact of environmental risks on banks’ operations, central banks and supervisors are taking a number of initiatives to reduce the negative impact of these risks on banks’ operations, and, thus, financial stability. The paper aims to point out the challenges that sustainable banking has posed to regulators and the risk management system


Keywords

sustainable banking, environmental risks, regulation

Full Text:

PDF

References


BCBS (2020). Climate-related financial risks: A survey on current initiatives. Bank for International Settlements.

BGLN (2020). Sustainability and purpose in banking, Bank Governance Leadership Network ViewPoints. Retrieved from https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/banking-and-capital-markets/ey-bgln-viewpoints-sustainability-and-purpose.pdf

Beeching, A., Nuzzo, C. & Adams, T. (2017). Shifting perceptions: ESG, credit risk and ratings - Part 1: The state of play. UNEP Inquiry, PRI, UN Global Compact UNEP Finance Initiative. Retrieved from: http://unepinquiry.org/wp-content/uploads/2017/07/PRI_Shifting-Perceptions_The-state-of-play.pdf

Case, P. (1999). Environmental Risk Management and Corporate Lending: A Global Perspective. Cambridge: Woodhead.

Coleton, A, Font Brucart, M, Gutierrez, P, Le Tennier, F., & Moor, C. (2020). N. 6 – January 2020 Sustainable finance Market practices. EBA Staff Papers Series DZ-AH-19-003-EN-N. European Banking Authority. Retrieved from https://www.eba.europa.eu/sites/default/documents/files/document_library/Sustainable%20finance%20Market%20practices.pdf

Cui, Y. J., Geobey, S., Weber, O., & Lin, H. Y. (2018) The impact of green lending on credit risk in China. Sustainability, 10(6). http://dx.doi.org/10.3390/su10062008

ECB (2020). Guide on climate-related and environmental risks: Supervisory expectations relating to risk management and disclosure. Retrieved from https://www.bankingsupervision.europa.eu/legalframework/publiccons/pdf/climate-related_risks/ssm.202005_draft_guide_on_climate-related_and_environmental_risks.en.pdf

EBF (2017). Towards a Green Finance Framework. European Banking Federation, Retrieved from https://www.ebf.eu/wp-content/uploads/2017/09/Geen-finance-complete.pdf

EY/IIF (2020). An endurance course: surviving and thriving through 10 major risks over the next decade, Tenth annual EY/IIF global bank risk management survey. London: EYGM Limited.

Jeucken, M. (2001). Sustainable finance and banking: the financial sector and the future of the planet. London: Earthscan Publications Ltd.

Jeucken, M., & Bouma, J. (2001). The changing environment of banks. In: Bouma, Ј., Jeucken, М. & Klinkers, L. (Eds.), Sustainable banking: The greening of finance (pp. 24-38). UK: Greenleaf Publishing Limited.

NGFS (2020a) The Macroeconomic and Financial Stability Impacts of Climate Change Research Priorities. June 2020. Retrieved from https://www.ngfs.net/sites/default/files/medias/documents/ngfs_research_priorities_final.pdf

NGFS (2020b). Overview of Environmental Risk Analysis by Financial Institutions Network for Greening the Financial System. Technical document, September 2020. Retrieved from https://www.ngfs.net/sites/default/files/medias/documents/overview_of_environmental_risk_analysis_by_financial_institutions.pdf

Nizam, E., Ng, A., Dewandaru, G., Nagayev, R., & Nkoba, M. (2019). The impact of social and environmental sustainability on financial performance: A global analysis of the banking sector. Journal of Multinational Financial Management, 49, 35-53. https://doi.org/10.1016/j.mulfin.2019.01.002

OECD (2020). OECD Business and Finance Outlook 2020: Sustainable and Resilient Finance. Paris: OECD Publishing.

Park, H., & Kim, D. J. (2020). Transition towards green banking: role of financial regulators and financial institutions. Journal of Sustainability and Social Responsibility, 5(5). https://doi.org/10.1186/s41180-020-00034-3

Repetto, R., & Austin, D. (2001). Estimating the financial effects of companies environmental performance and exposure, in: JJ Bouma, MHA Jeucken and L KI, Sustainble Banking – The Greening of Finance, pp. 280 – 294, Greenleaf, Sheffield

Schoenmaker, D., & Schramade, W. (2019). Principles of Sustainable Finance. Oxford University Press. Retrived from https://ssrn.com/abstract=3282699

Schücking, H., Kroll, L., Louvel, Y., & Richter, R. (2011). Bankrolling climate change - A Look into the Portfolios of the World’s Largest Banks. Retrieved from: https://www.banktrack.org/download/bankrolling_climate_change/climatekillerbanks_final_0.pdf

S&P Dow Jones Indices: Dow Jones Sustainability Indices Methodology (2021). Retrieved from: https://www.spglobal.com/spdji/en/documents/methodologies/methodology-dj-sustainability-indices.pdf, Accessed on: 3 April 2021.

SSE initiative and the World Federation of Exchanges. (2019). How exchanges can embed sustainability within their operations: A blueprint to advance action.

Sustainable Stock Exchange Initiative. (2021). Retrieved from: https://sseinitiative.org/exchanges-filter-search/

Tarna, K. (1999). Reporting on the Environment: Current Practice in the Financial Services Sector, in: JJ Bouma, MHA Jeucken and L KI, Sustainble Banking – The Greening of Finance, pp. 280 – 294, Greenleaf, Sheffield.

UNEP FI (2007). Green Financial Products & Services: Current Trends and Future Opportunities in North America. Retrieved from https://www.unepfi.org/fileadmin/documents/greenprods_01.pdf

UNEP FI (2021). Retrieved from: https://www.unepfi.org/news/25th-anniversary/timeline/

United Nations General Assembly (1987). Report of the world commission on environment and development: Our common future. Oslo, Norway: United Nations General Assembly, Development and International Co-operation: Environment.

Weber, O., & Acheta, E. (2016). The Equator Principles: Do they make banks more sustainable?. Inquiry working paper, 05.

Weber, O., Hoque, A., & Islam, M. A. (2015). Incorporating environmental criteria into credit risk management in Bangladeshi banks. Journal of Sustainable Finance & Investment, 5(1-2), 1-15.




DOI: https://doi.org/10.22190/FUEO210609024J

Refbacks

  • There are currently no refbacks.


© University of Niš, Serbia
Creative Commons License CC BY-NC-ND
ISSN 0354-4699 (Print)
ISSN 2406-050X (Online)