ESG Database

Banking Industry

The banking sector plays a crucial role in emissions control, as financial activities can have significant impacts on the environment and climate, even though banks are not direct emitters or major consumers of electricity. As the primary facilitator of capital flows, banks' decisions on investment, lending, and risk management are inextricably intertwined with corporate sustainability.

Amid rising climate awareness more banks are incorporating environmental, social, and corporate governance (ESG) criteria into their risk assessment. These banks are actively engaging in carbon accounting (or internal carbon pricing), assessing the impact of their investment portfolios and loans on carbon emissions to reduce the proportion of financing for carbon-intensive industries, and prioritizing renewable energy, clean technology, and eco-friendly enterprises. Some banks have begun to develop climate-friendly financial instruments, such as green loans, green bonds, and ESG-integrated funds, to support low-carbon projects, which not only help to reduce carbon emissions but also promote social and economic development.

The use of renewable energy is becoming more widespread in the banking sector. Many financial institutions have embraced renewable energy as part of their sustainability strategies and are actively adopting clean energy sources such as solar, wind, and hydropower to reduce reliance on traditional energy sources. In addition to building their own power generation facilities, they also support and provide financial resources to renewable energy projects such as wind farms and solar power plants. By the end of 2023, several banks have achieved RE100, demonstrating the industry's proactive attitude toward sustainability. Going forward, the main challenge for the banking sector will be how to achieve net-zero using more diversified approaches with its clients.