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Purpose: This chapter discusses the need for climate change risk mitigation and why it is not the responsibility of Central Banks to mitigate climate change risk.

Methodology: This chapter uses critical discourse analysis to explain why central banks should not have the responsibility for climate change risk mitigation.

Findings: This chapter argues that the responsibility for managing climate change risk should lie with elected officials, other groups and institutions but not Central Banks. Elected officials, or politicians, should be held responsible to deal with the consequence of climate change events. Also, international organizations and everybody can take responsibility for climate change while the Central Bank can provide assistance – but Central Banks should not lead the climate policy making or mitigation agenda.

Implication: The policy implication is that the responsibility for climate change risk mitigation should be shifted to politicians who are elected officials of the people. Also, international climate change organizations or groups can take responsibility for mitigating the climate change risk of member countries. Finally, citizens in a country or region should have equal responsibility for climate change. Climate information should be provided to every citizen to help them prepare for future climatic conditions.

Originality: This chapter propagates the idea that Central Banks should take a lead role in dealing with the problems of climate change. This chapter is the first chapter to contest a Central Bank-led climate change risk mitigation agenda.

Purpose: This chapter discusses some policy options that central banks may find useful in dealing with climate change risk in the financial sector.

Methodology: This chapter uses discursive analysis to suggest policy options which central banks can use to deal with the risk of climate change in the financial sector.

Findings: Five policy options are proposed in the chapter, which includes: imposing a climate change capital surcharge; impose a fixed-rate risk capital – based on Tier 2 capital; a reduction in lending to industries whose activities destroy the environment and climate; creating a climate bank; and requiring financial institutions to relocate their important assets to areas less prone to climate change events.

Implication: Several policy experiments are needed to identify the best policy option that works best for each country while taking into account the unique financial sector, financial system, and climate change history of each country.

Originality: Central banks play an important role in regulating the financial sector and in managing its inherent risks, yet there are no studies that suggest policy solutions to help central banks and other financial sector regulators deal with the risk that climate change poses to the financial sector. This chapter suggests policy options that central banks can use to deal with the risk that climate change poses to the financial sector.

Climate and environment-related financial risks could significantly and negatively impact the financial sector in future, particularly its financing to those sectors adversely impacted by the climate-related risks, low-carbon policies and the transition from traditional energy sources-based economy to a more sustainable system with alternative energy sources. The participatory countries of the Paris Agreement agreed to align finance flows with a low-emission, low-carbon and climate-resilient growth, in order to facilitate achieving the long-term climate goals. The financial sector, therefore, needs to play a proactive role in aligning financial flows. It is, therefore, of utmost importance to study low-carbon finance and climate-related financial risks. This chapter examine how climate change can affect the financial sector. It discusses the concept, nature, measurement of climate risks and climate-related financial risks and associated prospects and challenges in the assessment and the measurement of these risks. It also presents the green financing initiatives and role of central banks and supervisory authorities and their monetary and financial policies in enhancing green financing and redirecting finance to low-carbon activities. In the financial sector, the insurance industry is highly vulnerable to such risks. The banking sector is yet to witness the serious impact of these risks. With the slowing of global economic growth, appropriate policies are needed to encourage banks to provide increased green finance with an adequate profitability. Studies recommend that climate-related risk has a strong potential impact on banks’ loan default rate as well as on the financial stability, there is hence a need to incorporate climate-related criteria and the systemic risk arising out of climate change into banks’ decision-making process and risk modelling and management. There is a need for developing an appropriate methodology for assessing and reducing these risks. Moreover, observers also anticipate a need for cooperation between banking regulators and banks to develop and adopt best practices in the management of environmental risks. The environment-related risks will call forth a multi-country, or regional, research office to collect and compile the required data and undertake analysis to enhance the banking sectors’ understanding of, and capacity to address, potential systemic environmental risks. What is needed is to test the feasibility of incorporating forward-looking scenarios for assessing potential impacts of providing credit to environmentally unsustainable or sustainable activities on financial stability.

This paper aims to investigate how and to what extent the Fijian sustainable banking regulations or guidelines are designed, communicated, implemented and monitored within the financial system in Fiji. A scorecard is introduced for this purpose to assess the effectiveness of Fiji’s financial battle against climate change (FBACC).

This study uses a mixed-method methodology. Data were collected mainly from a survey and supplemented by interviews, observations and documents. The scorecard was developed by building on existing two theoretical frameworks, namely, the Sustainable Banking Assessment and Climate Change Governance Index, to make them more appropriate and practically applicable to less developed financial systems in emerging economies such as Fiji. This FBACC scorecard consists of four perspectives, eight critical factors and 24 criteria.

The results show that the overall FBACC score averages 40.75%, and all the perspectives scored below 50%, the benchmark. Only the CF “policy” scored 54.25% because of a high positive response of 82.3% for the “political leadership” criterion. The relative contributions of each perspective in constructing the overall score are distributed as 28%, 25%, 24% and 23% among planning, action, accountability and control, respectively.

These results were complemented by the information shared during the interviews and confirmed that the existing political initiatives need to be effectively communicated and/or implemented in the financial system by the regulatory agencies.

This FBACC scorecard can be applied to other underdeveloped systems in emerging countries to assess the effectiveness of the sustainable banking regulations and/or guidelines in those countries in relation to the FBACC. It can also be applied to individual firms to assess their contribution to the FBACC.

To the authors’ best knowledge, this might be the first study in Fiji that considers the impact of climate-related financial risk on the Fijian financial system.

The purpose of this paper is to investigate the extent of voluntary climate change disclosures in the Turkish banking industry and explore the factors explaining the extent of such disclosures.

The research sample is based upon 24 banks that had been continuously operating in Turkey over the seven-year period from 2010 to 2016. The study uses a disclosure index to investigate the extent of voluntary climate change-related disclosures made in their annual and sustainability reports by banks. The study also investigates factors impacting the extent of disclosures by using multiple regression and fractional regression analysis.

The findings of the research reveal that while the number of banks providing voluntary information on their climate change-related practices substantially increased from 2010 to 2016, there remains a significant number of banks that have not incorporated climate change-related issues into their lending policies or corporate strategies. Further, with regard to the regression analysis, the study documents the significant and positive impacts of bank size, profitability, bank age and listing status upon the extent of the climate change disclosures, in line with political cost and legitimacy theory.

The banking sector crucially impacts climate change indirectly, since banks provide financial backing to companies operating in environmentally sensitive industries. This paper presents empirical evidence of the factors impacting the extent of climate change disclosures by these banks, which might then be referred to by regulatory bodies when developing policies to promote environmentally responsible business practices within the banking industry.

Several parties, which include governments, companies, financial institutions and non-governmental organizations (NGOs) must work together to fight climate change. In this sense, the NGOs and green activists have a crucial role in raising public awareness about climate change, which might then inspire financial institutions to incorporate climate change-related issues into their policies, operations and strategies.

The study extends the prior literature in two ways. This study has concentrated on environmental reporting practices in the banking sector which have been investigated in very few prior studies. Since prior research has focused on developed countries, this paper adds to the current literature by examining the environmental disclosure practices of commercial banks operating in Turkey, which is a rapidly developing country.

Indian banking sector is facing a number of challenges, and increasing number of corporate frauds and employee turnover are among the top list. Literature reveals that gaining insights about ethical climate may provide a possible solution and relief from the challenges being faced. This paper aims to contribute to the understanding of the prevalent various ethical climate types in the Indian banking industry. Furthermore, it presents interesting results by investigating the effect of five theorized ethical climate types on organizational commitment along with its three components in the banking sector.

This empirical research encompasses a descriptive research design. Sample uses 266 respondents from four prime banks of the Indian banking industry.

Statistical analyses unveiled that all five conceptualized ethical climate types are prevalent in the Indian banking industry. However, the perception of employees for caring climate was the highest among all others. In contrast to the results reported by Western studies, this research reveals a strong negative impact of instrumental climate on affective commitment. Furthermore, it has been seen that instrumental climate is a significant predictor for the three components of commitment (affective, continuance and normative). However, it fails to predict the overall organizational commitment construct. Likewise, opposed to findings of Western countries, law and code, rules and independent climate types have shown significant relationship and impact on organizational commitment for Indian banking sector employees. It has been found that different commitment components are predicted by a diverse mix of climate types in India.

Findings highlight varying strength of relationship and predictive ability of different ethical climate types with commitment. This helps in elucidating that managers and top executives should focus on building an ethical work environment to warrant high-level commitment among employees. Congruence between employee, manager and organizations’ perception of ethics is a pre-requisite for maintaining a long-term relationship among the parties. This study will enable understanding the role of ethical climate in reducing corporate frauds and employee turnover.

This research addresses a significant gap in literature by exploring the relationship between ethical climate and organizational commitment. The study uses data from the Indian banking industry which contributes to expanding knowledge of the relationship in the Indian context.

Unique among European Union (EU) economic governance entities and multilateral banks, the European Investment Bank (EIB) possesses a dual nature, as an EU body and a bank. The EIB has been ever evolving to adapt to policy and market developments and to reflect the geo-economic landscape. In 2019, in association with the EU's Green Deal, the bank announced its metamorphosis into a “Climate Bank,” ending its fossil fuel lending after 2021. Additionaly, upon the outbreak of coronavirus disease 2019 (COVID-19) and its attendant health and economy crisis, EU decision-makers have solicited the bank to support both urgent needs for tackling and countering the spread of the disease and the post-pandemic economic recovery. Nevertheless, devastated economic actors in need of assistance fall within many sectors, including some less green ones.

This article is grounded on agency theory for developing a generic stakeholder framework, which is then subsequently applied in investigating the EIB, in interaction with its main stakeholders.

This article investigates the EIB stakeholders in pursuing these two seemingly contradictory objectives of exclusively restricting its activity to green funding and expanding its action for achieving a broad impact in the real economy. By exploring this tension, the article argues that by prioritizing the post-COVID restart, the EIB risks to deviate from its strict green commitment.

The analysis of the EIB's divergent stakeholder stances demonstrates some ambivalence in future EIB activity in an effort to equipoise climate finance with a post-pandemic boost. The same ambivalence might equally occur with other major economic governance actors. The stakeholder framework developed and applied in the case of the EIB can be useful for studying also the stakeholder dynamics of other organizations.

The analysis demonstrates a tension between selective climate-related funding for “building back better” and the need for a wide broaching of countercyclical stimulus, with implications for economic and social actors alike.

The approach is novel, as it develops a new analytical framework for understanding stakeholder dynamics and tests it empirically on the EIB. This constitutes the first study of EIB stakeholder management.

Climate change poses effect on banking sector’s risks and profitability through adaptation of green technology. This study aims to incorporates green technology adaptation in three sectors: green banking, green entrepreneurial innovation (EI) and green human resource (HR), in a model of bank’s performance. And determines the impact of climate change on bank risk and profitability.

An assessment of profitability and risk profile of commercial banks is done for 27 European countries for 2013–2022, employing a two-step difference system-generalized method of moments estimation technique with a moderate effect of climate change by including interaction between climate change and green technology adaptation.

The results indicate that green banking increases profitability, reduces credit risk and increases liquidity risk. The results also show that green human resource increases profitability and becomes a source of credit and liquidity risks for the banks. Green EI increases credit risk and liquidity risk, while the effects of green EI on profitability vary with the use of two proxies: Green patents increase profitability and environment, social and corporate governance (ESG) scores decrease profitability.

Supportive government initiatives, including subsidies and tax rebates to green borrowers, may take the burden of green transition off the banking sector.

This paper observes the impact of green technology adaptation in three sectors: banks, EI and HR, moderated by climate change, adding substantially to the existing literature in conceptual framework and methodology.

In the last few decades, the frequency and intensity of extreme weather events have increased in most parts of the world including Canada because of global warming. The global warming in Canada is about double the magnitude of global warming; therefore, policymakers are concerned about the potential significant impact of the weather catastrophes on the economy and financial sector. The purpose of this study is to explore the impact of weather catastrophes on the Canadian banking sector.

Using a sample of banking firms from Canada over the period 1988–2019, the present study estimates different econometric techniques to investigate the impact of weather catastrophes on the risk and performance of Canadian banks.

Analyses of the study do not find a significant impact of the weather catastrophes on the performance of the Canadian banks; however, it has helped banks to lower their risk level and improve stability due to proactive risk management. The findings of this study are not consistent with concerns of the policymakers about climate risk to the Canadian bank sector. More sector-specific research and policy initiatives are recommended to minimize the future financial risk of the increased frequency and intensity of natural disasters.

The study contributes to support the notion that the climate risk of banks is protected with insurance and reconstruction activities provide more banking opportunities.

The purpose of this paper is to evaluate the effect of learning climate on customer-oriented behaviors by incorporating salespeople’s customer knowledge in the banks. It also explores the mediating role of customer knowledge between learning climate and customer-oriented behaviors.

A conceptual two-level model that links learning climate to customer-oriented behaviors was developed and tested using data collected from salespeople and customers in banks in Taiwan. Data from 444 customers involving 92 salespeople was collected via a questionnaire and analyzed using hierarchical linear modeling.

The results show that learning climate encourages salespeople to develop customer knowledge and customer-oriented behaviors, and that salespeople’s customer knowledge positively influences customer-oriented behaviors. This study also provides empirical support for the hypotheses that learning climate helps salespeople increase customer-oriented behaviors through improving salespeople’s customer knowledge.

The findings highlight the importance of enhancing learning climate and customer knowledge to enable banks to improve salespeople’s customer-oriented behaviors. This research also points to customer knowledge as mediating mechanisms that can explain the association between learning climate and customer-oriented behaviors in the sales context.

By integrating knowledge management with organizational learning research, this study evaluates the effect of learning climate on salespeople’s customer-oriented behaviors by incorporating their customer knowledge. In addition, the present study points to salespeople’s customer knowledge as one of several mediating mechanisms that explains the association between learning climate and customer-oriented behaviors.