Sustainable finance and the banks

Thornton, John (2025) Sustainable finance and the banks. Economia Internazionale. ISSN 2499-8265 (In Press)

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Abstract

This paper reviews the growing literature on sustainable finance. The empirical evidence on the key issues is very mixed with the results from ESG literature are especially problematic. The results from the literature on banks and climate change more specifically are clearer with good indications that banks will provide firms with the finance for innovation and its diffusion. Voluntary commitments by banks to operate to reach net zero carbon emissions by 2050 do not appear to be effective and in the transition to a low carbon economy it is not clear that banks are reallocate funds to low carbon sectors or that they are charging higher interest rates to high polluting firms. The evidence on how banks are dealing with the physical risks from climate change are more encouraging in these respects. The literature on central banking and monetary policy generally advocates a return to policies of the 1950s-70s with an emphasis on directed credit, preferential interest rates, reserve requirements, capital and liquidity ratios to promote green finance, but the financial stability-related literature recognizes clearly the need for central banks to be prudent and incorporate climate risks into their operations and policy frameworks. Key words: Sustainable finance, bank performance, ESG scores, carbon emissions, central bank policies

Item Type:	Article
Uncontrolled Keywords:	sustainable finance,central bank policies,carbon emissions,bank performance,sdg 8 - decent work and economic growth,sdg 12 - responsible consumption and production,sdg 13 - climate action,1* ,/dk/atira/pure/sustainabledevelopmentgoals/decent_work_and_economic_growth
Faculty \ School:	Faculty of Social Sciences > Norwich Business School
Depositing User:	LivePure Connector
Date Deposited:	17 Jan 2025 01:06
Last Modified:	06 Feb 2025 12:31
URI:	https://ueaeprints.uea.ac.uk/id/eprint/98236
DOI:

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