Banking for Climate Change: South Asia Initiatives

Abstract

Climate change and its associated risks are gaining attention from regulatory authorities in the banking sector. Climate‐related risks can significantly affect banks' lending behaviors, investment decisions, and operational practices, ultimately affecting their stability. As banks play a crucial role in fulfilling financing needs, including climate financing and confronting this global challenge, their actions make a significant difference. Therefore, it is imperative to understand the implications of climate change and the critical role banks play in mitigating its adverse effects on their business activities and safeguarding their stability. This study delves into these issues and focuses on whether central banks effectively devise or reformulate regulatory measures to ensure transparency and disclosure of sustainable practices, climate risks, and other climate‐related financial information, especially in South Asian countries. Transparency in sustainable and climate change practices is crucial as banks hold social responsibility. Further, the paper also sheds light on climate finance initiatives and bank compliance with revived frameworks in South Asia. The article concludes by offering relevant policy drawings to enhance banks' disclosure of climate‐related information.This article is categorized under: Climate Economics > Economics and Climate Change Policy and Governance > Governing Climate Change in Communities, Cities, and Regions Policy and Governance > National Climate Change Policy