Project Details
Description
Banks, in their role as development partners, have a big role to play in the transition to a sustainable economy. Banks’ corporate social responsibility (CSR) actions are considered a vehicle for achieving sustainable development of business and the economy. Also, in line with United Nations Environment Programme (UNEP) recommendations, the High-level Expert Group (HLEG) on sustainable finance (established by the European Commission) has argued to initiate a ‘climate-related financial disclosure’ on banks’ capital requirements. The EU-funded SUSBANK project investigated these by finding empirical support for the explicit acknowledgment of environmental risk as an emerging source of systemic risk. It investigates the impact of environmental sustainability engagement of banks on their reputation, earnings quality, CEO compensation, long-term growth, and, importantly, systemic risk.
Key findings
Analysing a comprehensive dataset of 1,483 banks from worldwide 88 countries, the empirical investigation confirmed that environmental engagement could certainly create a positive impact on banks’ reputation and systemic risk. However, earning quality and growth might be hampered as any green transition requires the cost-ineffective use of scarce resources. However, from the stability point of view, environmental engagement has to be practiced more as it could impact significantly towards the minimisation of systemic risk and thereby would contribute more to reducing financial and economic instability. Also as expected, the results showed that EU banks act differently for four out of five aspects including reputation, long-term growth, earning capacity, and systemic risk.
| Acronym | SUSBANK |
|---|---|
| Status | Finished |
| Effective start/end date | 1/10/20 → 30/09/22 |
| Links | https://cordis.europa.eu/project/id/896016 |