Banks' carbon pledges: amazing or a maze?

Cristina Angelico () and Enrico Bernardini ()
Additional contact information
Cristina Angelico: Bank of Italy
Enrico Bernardini: Bank of Italy

No 906, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This study documents new findings on euro-area banks' carbon pledges by exploiting a rich dataset that combines information on banks' climate targets, collected from several providers, with financial and credit data. Decarbonization goals are characterized by a considerable heterogeneity in time horizons, scope, ambition and metrics; the information is fragmented and often differs across sources. Larger banks provide most of the credit to the high-emitting sectors, charging them a relatively low interest rate spread, and they are more likely to set carbon pledges and join international initiatives. The effects of climate commitments on lending policies to firms in carbon-intensive sectors are weak, varied and only materialize a few years after the pledge. Providers disagree in their estimates of the implied temperature rise associated with banks' portfolios and commitments. Overall, such estimates reveal that the euro-area banking system is not well aligned with the Paris Agreement's goals, reflecting the still insufficient corporate decarbonization efforts. Banks committed to reducing their financed emissions are also paying close attention to broader nature-related and biodiversity issues.

Keywords: carbon reduction targets; net-zero commitments; climate risk; green lending; sustainable finance (search for similar items in EconPapers)
JEL-codes: G11 G21 Q50 (search for similar items in EconPapers)
Date: 2025-02
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.bancaditalia.it/pubblicazioni/qef/2025-0906/QEF_906_25.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_906_25

Access Statistics for this paper

More papers in Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area Contact information at EDIRC.
Bibliographic data for series maintained by ().