THE BANKING SYSTEM – “LIMPING” TOWARD A SUSTAINABLE FUTURE. IS GREEN FINANCE A “THING” IN ROMANIA AS OF MARCH 2023?

Green finance became a trending topic in the European Union after the 2015 adoption of the Paris Agreement, which acknowledged in Article 2 the relation between the “financial flows” and investment projects promoting “low greenhouse gas emissions and climate-resilient development”. Banks are uniquely positioned to direct financial flows toward these projects as they are the leading financial intermediaries in the European Union . In this context, to understand where banks in Romania stand as of March 2023 in innovating financial products that are included in the green finance sector of the financial markets (and, in a few cases, in the social or sustainable finance sectors), I systematically reviewed public information on each bank’s website, sustainability reports (where available), press releases and a financial products consolidation website (www.conso.ro). I found that banks in Romania are “limping” toward a sustainable future because (1) only half of the commercial banks manufactured and distributed at least one green financial product, (2) many banks ticked the green financial products checkbox with the low-hanging fruit of providing loans for newly built houses which, due to EU-level regulation, should be energy efficient just because they are new and (3) only two banks engaged in issuing green/sustainable bonds. Based on the findings from this article, the answer to the question in the title is “Yes, but…”. In the last 6 years, banks in Romania have slowly adopted green, social, and sustainability-labeled financial products and started “greening” their balance sheets. These special-purpose products accelerate the directing of financial flows toward companies and projects aligned with the Paris Agreement objectives. However, the stock of green financial products is below potential and further research is needed to understand how much greenhouse gas emissions are avoided by banks’ efforts and how the banking sector mitigates greenwashing and conflicts of interest risks.