The impact of climate change management on banks profitability

This study empirically examines the influence of climate change management on banks' profitability using panel data of a sample of 137 banks from 36 emerging and developed countries during the period 2011-2019, using the Generalized Method of Moments. Our empirical evidence shows that, although banks seem to be aware of the consequences of climate change on their business, to the point of making it a strategic topic worthy of the board of directors, they remain very timid in terms of operational implementation. It leads to a positive impact on profitability limited to the overall quality of climate change management and disclosure and an ex-post justification of the topic's relevance to the board. The foreseeable introduction of new banking regulations and the current weak relationship between climate change managerial practices and financial performance should encourage banks to pay greater attention to these practices to preserve their future returns.

Automated summary

This study empirically examines the influence of climate change management on banks' profitability. The findings indicate that while banks are aware of the consequences of climate change on their business, they remain conservative in their operational implementation. However, the anticipated introduction of new banking regulations and the current weak relationship between climate change management practices and financial performance should encourage banks to pay greater attention to these practices.