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ESG risks: a new source of risks for the banking sector

Author

Listed:
  • Faidon Kalfaoglou

    (Bank of Greece)

Abstract

This study is motivated by the fact that the financial sector has been mandated to support political decisions promoting sustainable development. For the banking sector, ESG (environmental, social and governance) risks constitute a new source of risks which should be identified, evaluated, monitored and managed. Given the novel nature of these risks, this is a challenging task. The purpose of this study is to clarify concepts, increase awareness and facilitate the assimilation of the regulation into the decision-making process. The first part of the study analyses the ESG themes and the transmission channels towards the traditional banking risks. The second part focuses on the initiatives that may facilitate the ESG framework to be introduced into the financial sector. The third part focuses on how banks can incorporate ESG themes into decision-making. The ambitious policy agenda in relation to sustainability requires a shifting mindset in the financial sector, in order to finance the transformation towards sustainability.

Suggested Citation

  • Faidon Kalfaoglou, 2021. "ESG risks: a new source of risks for the banking sector," Economic Bulletin, Bank of Greece, issue 53, pages 83-112, July.
    • Handle: RePEc:bog:econbl:y:2021:i:53:p:83-112
    DOI: 10.52903/econbull20215305
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    Citations

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    Cited by:

    1. Nikos Ventouris & Georgios Palaiodimos, 2022. "Proposals for the reform of EU fiscal rules," Economic Bulletin, Bank of Greece, issue 55, pages 67-81, July.
    2. Cosma, Simona & Rimo, Giuseppe & Torluccio, Giuseppe, 2023. "Knowledge mapping of model risk in banking," International Review of Financial Analysis, Elsevier, vol. 89(C).
    3. Ioanna C. Bardakas, 2022. "Energy consumption by energy type and exports of goods in Greece: a comparative analysis in relation to the euro area," Economic Bulletin, Bank of Greece, issue 56, pages 75-92, December.

    More about this item

    Keywords

    sustainable finance; UN SDGs; Paris Agreement; ESG risks; transmission channels; responsible banking; responsible investing; ESG-linked financial products; ESG and bank corporate governance; ESG and bank risk management; ESG investing;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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