Are there banks that take into account the forecasted climate changes related to the ongoing global warming process in the creditworthiness assessment process?
Are there banks that in lending in the field of granting long-term investment and mortgage loans in the process of assessing the creditworthiness of potential borrowers include forecasted climate changes related to the ongoing global warming process?
For long-term investment loans and mortgages granted for 20, 30 years or more, predicted climate changes related to the ongoing global warming process may already be significant.
Please reply
Best wishes
As the issue gains importance, this is being examined by lenders. In India Banks are working with Startups to develop predictive models.
Please look at programmes of World Bank, MIGA, OPIC and EBRD for lending programmes that support greening and counter climate change.
Environmental changes are accounted for in agricultural lending in Russia, yet only in the short-term (in the risk premium of the interest rate under floating interest rates regime).
Dear Friends and Colleagues of RG,
Some banks conducting an analysis of the creditworthiness of an enterprise applying for a long-term investment or mortgage loan take into account the issues of climate change, if these changes may affect the business profitability of a specific lending business venture. For example, in the case of a hotel application for a long-term investment loan operating on the sea, the level of which can rise and flood the hotel area.
Another example is a hotel located in the mountains, where winter sports tourists come. Climate change predictions may indicate that 10 years of snow will no longer be the place where this hotel in the mountains provides its services. Therefore, the bank may not grant credit due to the forecasted secondary effects of progressive climate changes and, above all, the rising average temperature.
On the other hand, companies are developing which produce components for new power plants producing electricity as part of renewable energy sources, produce electric car equipment components, e.g. electric motors, batteries, etc. More and more innovative startups are being produced as part of cooperation with large enterprises and renewable energy plants Wind turbine type subassemblies, charging devices for electric cars, etc. Other companies manufacture packaging from recycled materials, recycled or from biodegradable materials.
Other companies are developing innovative solutions for automatic sorting of rubbish. If eco-friendly products become popular and the state creates good institutional, legal and financial conditions for the development of such projects, then the process of implementing sustainable green economy based on the green economy concept will be implemented more quickly and business probes will become more and more profitable. Financial institutions, including banks, will gradually take into consideration eco-friendly processes and business activities of clients in concluded financial transactions.
Do you agree with me on the above matter?
In the context of the above issues, I am asking you the following question:
Are there banks and / or companies that take into account forecasted climate changes in their business decisions?
Please reply
I invite you to the discussion
Thank you very much
Best wishes
Dear Abd Alwahed 万赫德 Dagestani, Rafiq Idris, Emmanuel V Murray, Mirna Leko-Šimić, Philip Corsano-Leopizzi, Dmitry Burakov, Thank you very much for participating in this discussion and providing inspiring and informative answers to the above question: Are there banks that take into account predicted climate change in the creditworthiness assessment process?
Thank you very much for your inspiring, interesting and highly substantive answer.
Thank you for the interesting information sent. In view of the above, in my opinion, in recent years the importance of the issues described in this discussion has grown. I also believe that there are more and more examples of financial institutions which take into account environmental issues in their financial product offers. For example, some commercial banks, as part of green finance development, offer green crdits, with the help of which economic undertakings are financed, which are part of the process of implementing the principles of sustainable development into economic processes carried out by specific companies, enterprises, institutions, etc., and the pro-ecological transformation of the traditional brown economy into a sustainable green economy / circular economy.
What do you think about it?
Thank you very much and best regards, Have a nice day,
Dariusz Prokopowicz
- Badges
- Science topic
- Similar topics
- Geoscience
- Atmospheric Sciences
- Climate Science
- Climate Change