In the country where I operate Multilateral Development Banks (MDBs) referred to as universal commercial banks, i.e. the dominant banking entities in the financial institutions sector are taking advantage of the increasingly widespread trend of green transformation of the economy implemented to varying degrees in different sectors of the economy and are increasingly practicing greenwashing. Green loans, with the help of which pro-climate, pro-environmental, pro-environmental economic ventures implemented by borrowers are externally financed, have functioned in the offer of these banks for a long time, but many atts ago, such as in the 1990s, they were not referred to as green loans only as part of standard economic investment loans. On the other hand, when, since the pro-climate UN Conference in Paris 2015, the pro-climate, pro-environmental, pro-environmental awareness of citizens began to grow to a significant degree and the scale of implementation of green economic projects carried out by companies and enterprises operating in various sectors of the economy increased, commercial banks also took up this topic and the loans they had been granting for years began to call green loans and the issue of greenness, sustainability, etc. began to add to their business missions and to advertising campaigns in which they promote certain types of financial instruments from their product and service offerings. In recent years, there have been a number of advertising campaigns promoting the financial product offerings of individual commercial banks, in which the banks portray themselves as green financial institutions offering green loans, green corporate bonds, etc., and present themselves as banks with a mission of sustainability and greenness, i.e. to achieve selected sustainable development goals (chosen from among the 17 UN Sustainable Development Goals), entities that also implement non-financial, additional ESG reporting (required by the European Union of corporations from Br 2024), financing and implementing green economic projects, fitting into the green transformation of the economy, into the currently fashionable trends of pro-climate, pro-environmental and pro-environmental policies. In view of the above, on the one hand, the scale of green financing of pro-climate and pro-environmental economic projects is growing. On the other hand, there are more and more examples of the use of greenwashing also by commercial banks, which present themselves as green financial institutions in advertising campaigns, public relations activities, etc., despite the fact that the scale of green loans still constitutes a small percentage of the total lending activity. This is because there are no precise yardsticks, indicators by which the level of greenness of commercial banks' credit policies, etc., could and should be measured. On the other hand, the increase in the scale of green lending recorded over the past few years is due to the fact that commercial banks have lobbied in the sphere of national policy for the mandatory use of bridge loans by beneficiaries of European Union subsidies for the implementation of pro-climate economic projects, mainly implemented in the field of green energy transition, i.e., e.g. building a household wind farm and/or installing photovoltaic panels on the roof of the residential home of the prosumer user borrower, installing a heat pump at home, water intake from geothermal sources and/or building a household sewage treatment plant, a composting facility on a farm, converting a farm to a sustainable organic farming model and/or green agro-tourism, to build a rainwater catchment system, to purchase an electromobile vehicle, to carry out real estate development projects to build residential houses in accordance with sustainable construction principles, to carry out pro-environmental investments in a municipal cleaning company to improve the efficiency of waste segregation systems and significantly increase the scale of recycling, etc. Besides, commercial banks in an effort to continue to be at the forefront of implementing technological innovations in ICT, Industry 4.0/5.0, including cloud computing, multi-criteria simulation models, metaverse, Internet of Things, Business Intelligence, Blockchain, digital and biometric cybersecurity instruments, Big Data Analytics and generative artificial intelligence are constantly improving online and mobile banking systems and increasing the scale of making their green financial instrument offerings available via the Internet. Besides, commercial banks are increasingly using the aforementioned new technologies, including generative artificial intelligence technology to improve their credit risk management processes related to bank lending, including green loans. Thus, commercial banks implementing the mentioned new technologies into the processes of analyzing the creditworthiness of a potential borrower increase the scale of automation of processes, reduce the level of operating costs and thus increase the scale of economic efficiency and financial profitability of their lending activities. This realizes the synergy of automation, digitization, increasing the efficiency of various processes carried out in commercial banking. Within the framework of improving the processes of integrated credit risk management of the loan portfolio, including primarily green loans, new solutions are being implemented for identifying, analyzing, quantifying, valuing, securing credit risk arising from the bank's financing of green, pro-climate, pro-environmental, pro-environmental business ventures implemented by the borrower. Within the framework of the aforementioned refinement, the level of credit risk is appropriately reduced for green business ventures, for the implementation of sustainable investment projects, due to which, in the future, the costs of the sustainable, pro-climate business activities carried out will be lower and, therefore, the repayment capacity of the loans will be higher. Accordingly, the level of credit risk for green credit-financed pro-climate business projects is correspondingly lowered in the framework of the creditworthiness analysis carried out, and the loan price, the cost of borrowing financial capital, the oproc. level of green credit vis-à-vis conventional business credit is also correspondingly slightly lowered. The lower cost of lending funds to the borrower under the green loan is presented in advertising campaigns promoting the bank and its offerings as an element of greenness and sustainability of the thus modified mission of the financial institution, which promotes itself as a green bank in line with the developing trends of green transformation of the economy. In this way, commercial banks can play a greater role in the future in terms of financial impact on the realization of sustainable development goals and the implementation of pro-climate, pro-environmental, green economic ventures carried out by their client companies and enterprises. In a situation where, due to the lower cost, it will be much easier to obtain a green loan from a bank compared to a conventional economic loan, the processes of green economy thanks to this issue may further accelerate. When these processes of realization of green transformation in the future thanks to this issue will significantly accelerate then the scale of protection of climate, nature and biodiversity of natural ecosystems of the planet will increase. Thus, the global warming processes that have been accelerating since the beginning of the first industrial revolution can be slowed down. However, in order for commercial banks to realistically join the processes of green transformation of the economy instead of practicing greenwashing, they should stop providing loans and other forms of financing for dirty, non-environmental, unsustainable economic ventures, including, for example, financing the development of fossil fuel raw material mines, construction of power plants that generate energy from burning fossil fuels, supporting the development of unsustainable, highly emission-intensive industries, industrial breeding of fur animals and livestock, combustion motorization, unsustainable, highly energy-intensive construction, and so on. On the other hand, commercial banks should be vetted on their green lending policies by banking supervisory institutions, and should be motivated to implement said green lending policies by a specially applied green monetary policy applied by central banking. I am conducting research on this issue. My profile includes articles on creditworthiness analysis of potential borrowers, credit risk management, central banking, green transformation of the economy, etc.

I am conducting research on this issue. I have included the conclusions of my research in the following article:

IMPLEMENTATION OF THE PRINCIPLES OF SUSTAINABLE ECONOMY DEVELOPMENT AS A KEY ELEMENT OF THE PRO-ECOLOGICAL TRANSFORMATION OF THE ECONOMY TOWARDS GREEN ECONOMY AND CIRCULAR ECONOMY

Article IMPLEMENTATION OF THE PRINCIPLES OF SUSTAINABLE ECONOMY DEVE...

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Warm greetings,

Dariusz Prokopowicz

The above text is entirely my own work written by me on the basis of my research.

In writing this text I did not use other sources or automatic text generation systems.

Copyright by Dariusz Prokopowicz

Multilateral Development Banks (MDBs) assess and allocate climate finance projects through a comprehensive process that includes:

1. Eligibility and Alignment: Projects must align with MDBs’ climate strategies and the goals of international climate agreements, such as the Paris Agreement.

2. Project Identification: Potential projects are identified based on country needs, climate impact, and development priorities.

3. Climate Impact Assessment: Projects undergo rigorous climate impact assessments to evaluate potential benefits for mitigation (reducing greenhouse gas emissions) or adaptation (enhancing resilience to climate change).

4. Due Diligence and Feasibility: Detailed feasibility studies and due diligence processes assess the technical, financial, and social aspects of the project.