The carbon content of Italian loans

Ivan Faiella and Luciano Lavecchia

Journal of Sustainable Finance & Investment, 2022, vol. 12, issue 3, 939-957

Abstract: There is a growing emphasis on the possibility that climate-related financial risks – such as an abrupt transition to a low-carbon economy – might increase the financial vulnerability of borrowers with consequences for lenders and, eventually, on the financial system as a whole. This article presents a first insight on the carbon content of business loans in Italy, comparing three methods of identifying the most exposed sectors. According to our estimates, the exposure of the Italian financial system in 2018 ranged between 8 and 10.2 per cent of banks’ total assets. This information is the starting point from which to evaluate, within a climate-scenario framework, how different climate policies could influence the stability of the banking sector.

Date: 2022
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DOI: 10.1080/20430795.2020.1814076

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