Impact of ESG Risks on Bank Financing Business

Leszek Borowiec and Tomasz Heryszek

European Research Studies Journal, 2025, vol. XXVIII, issue 2, 577-594

Abstract: Purpose: The aim of the study is to assess the effects of ESG information on the assessment of the risk of financing business entities by banks. Design/Methodology/Approach: The article uses a critical analysis of literature and legal acts. An assessment was made of internal regulations of banking institutions in the studied scope as well as few industry reports. The scope of the article refers to the impact of ESG risk on the assessment of the creditworthiness of business entities and the assessment of the possible loss of value of accepted collateral (e.g. real estate). Findings: The thesis that information disclosed in the field of ESG may be crucial for assessing the possibility of providing financing to business entities by banking institutions was verified in the paper. Practical Implications: The research results allow us to conclude that ESG risk management, depending on the efficiency of this process, may limit the negative impact on the assessment of the creditworthiness of the entity. Originality/Value: The topic of sustainable development is present in the literature on a wide scale, due to the implementation of legal regulations at the European level in the field of reporting and auditing reports on the environment, social and management aspects of activities (ESG). There is a research gap in the literature in the area of assessing the impact of ESG information on individual stakeholder groups.

Keywords: Sustainable development; ESG reporting (environmental; social; governance); bank; credit; creditworthiness. (search for similar items in EconPapers)
JEL-codes: G15 G18 G20 Q54 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ers:journl:v:xxviii:y:2025:i:2:p:577-594

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