Federico Giovanni Rega , Simona Russo , Dario Salerno
{"title":"Disentangling the S and the G in the European banking industry: The role of climate risk and opportunity awareness","authors":"Federico Giovanni Rega , Simona Russo , Dario Salerno","doi":"10.1016/j.ribaf.2025.102977","DOIUrl":null,"url":null,"abstract":"<div><div>The awareness of climate change risks and opportunities is crucial for the banking industry, as the environmental transition poses social (S) and governance (G) challenges. An extensive literature has examined the drivers and effects of ESG performance – proxied by ESG scores - on banking dimensions, whereas the relationship between climate risks and opportunities management and S and G factors has received little attention. Using a sample of European banks over the 2013–2022 period, we provide empirical evidence on the crucial role of financial institutions' climate awareness in improving S and G strategies and practices. In particular, this link is positive and significant for some social and governance sub-scores related to the green transition, such as <em>product responsibility, community, stakeholder engagement,</em> and <em>management</em>. Moreover, some supervisory and risk governance mechanisms, such as the IRB approach validation for regulatory purposes, seem to strengthen this relationship. Robust to a battery of sensitivity and robustness checks, our results offer a new contribution to the literature, providing useful suggestions for banks, policymakers, and regulatory authorities, supporting the ongoing debate about the interconnectedness between climate risk awareness and the other spheres of sustainable development.</div></div>","PeriodicalId":51430,"journal":{"name":"Research in International Business and Finance","volume":"77 ","pages":"Article 102977"},"PeriodicalIF":6.9000,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in International Business and Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0275531925002338","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
The awareness of climate change risks and opportunities is crucial for the banking industry, as the environmental transition poses social (S) and governance (G) challenges. An extensive literature has examined the drivers and effects of ESG performance – proxied by ESG scores - on banking dimensions, whereas the relationship between climate risks and opportunities management and S and G factors has received little attention. Using a sample of European banks over the 2013–2022 period, we provide empirical evidence on the crucial role of financial institutions' climate awareness in improving S and G strategies and practices. In particular, this link is positive and significant for some social and governance sub-scores related to the green transition, such as product responsibility, community, stakeholder engagement, and management. Moreover, some supervisory and risk governance mechanisms, such as the IRB approach validation for regulatory purposes, seem to strengthen this relationship. Robust to a battery of sensitivity and robustness checks, our results offer a new contribution to the literature, providing useful suggestions for banks, policymakers, and regulatory authorities, supporting the ongoing debate about the interconnectedness between climate risk awareness and the other spheres of sustainable development.
期刊介绍:
Research in International Business and Finance (RIBAF) seeks to consolidate its position as a premier scholarly vehicle of academic finance. The Journal publishes high quality, insightful, well-written papers that explore current and new issues in international finance. Papers that foster dialogue, innovation, and intellectual risk-taking in financial studies; as well as shed light on the interaction between finance and broader societal concerns are particularly appreciated. The Journal welcomes submissions that seek to expand the boundaries of academic finance and otherwise challenge the discipline. Papers studying finance using a variety of methodologies; as well as interdisciplinary studies will be considered for publication. Papers that examine topical issues using extensive international data sets are welcome. Single-country studies can also be considered for publication provided that they develop novel methodological and theoretical approaches or fall within the Journal''s priority themes. It is especially important that single-country studies communicate to the reader why the particular chosen country is especially relevant to the issue being investigated. [...] The scope of topics that are most interesting to RIBAF readers include the following: -Financial markets and institutions -Financial practices and sustainability -The impact of national culture on finance -The impact of formal and informal institutions on finance -Privatizations, public financing, and nonprofit issues in finance -Interdisciplinary financial studies -Finance and international development -International financial crises and regulation -Financialization studies -International financial integration and architecture -Behavioral aspects in finance -Consumer finance -Methodologies and conceptualization issues related to finance