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What are the banks doing in managing climate risk? Empirical evidence from a position map

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  • Toma, Pierluigi
  • Stefanelli, Valeria

Abstract

Policy makers, regulators, and banking supervisors are increasingly assigning significant financial resources to change consumption, production, and business models to be more environmentally friendly. Effective climate risk management and sustainable economic development both require the full involvement of an economy's financial system, particularly in countries with both a well-developed banking system and a high rate of vulnerability to climate change. How can an economy efficiently use the financial system to help tackle climate change? What choices are the banks making to combat climate risks while protecting the interests of stakeholders? How can these decisions be properly assessed? Our analysis offers a unique approach to addressing these concerns by using empirical data to create a spectrum of climate risk standards that allows us to assess the strategic position of each bank. The result is a positioning map of Italian banks on the strategic and organizational choices they have made for climate risk management is displayed. These results confirm the need for seeking greater organizational efforts in particular areas of financial management that can strengthen the fight against climate change. These results also offer useful insights for policy and managerial orientations to better protect the interests of stakeholders.

Suggested Citation

  • Toma, Pierluigi & Stefanelli, Valeria, 2022. "What are the banks doing in managing climate risk? Empirical evidence from a position map," Ecological Economics, Elsevier, vol. 200(C).
    • Handle: RePEc:eee:ecolec:v:200:y:2022:i:c:s0921800922001926
    DOI: 10.1016/j.ecolecon.2022.107530
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    2. Mundaca, Luis & Heintze, Jan-Niklas, 2024. "Banking on ecosystem services," Ecological Economics, Elsevier, vol. 224(C).
    3. Lee, Chien-Chiang & Wang, Chih-Wei & Hong, Pei-Hsuan & Lin, Weizheng, 2024. "Environmental policy stringency and bank risks: Does green economy matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    4. Zbigniew Korzeb & Paweł Niedziółka & Danuta Szpilko & Filippo Pietro, 2024. "ESG and climate-related risks versus traditional risks in commercial banking: A bibliometric and thematic review," Future Business Journal, Springer, vol. 10(1), pages 1-22, December.

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