Carbon Footprint of Bank Loans: Is Europe Really Going in the Green Direction?
Carbon Footprint of Bank Loans: Is Europe Really Going in the Green Direction?
Author(s): Milan Lazarević, Bojan BaškotSubject(s): Supranational / Global Economy, Business Economy / Management, Energy and Environmental Studies, Financial Markets, Public Finances, Socio-Economic Research
Published by: SAV - Slovenská akadémia vied - Ekonomický ústav SAV a Prognostický ústav SAV
Keywords: green finance; carbon footprint of bank loans (CFBL); carbon footprint calculation (CFC); ESG risks; climate transition risks; I-O analysis;
Summary/Abstract: The EU's ambitious environmental goals aim to make Europe a global leader in decarbonization. This paper investigates, using euro area data, whether the banking sector actively supports these initiatives through its loan portfolio carbon footprint. The main conclusion is that the banking sector acts as a free rider, with emission reductions occurring independently within corporate economic sectors. Spatial intermediation in the context of the green financing paradox does not play a key role. A Composite Carbon Footprint Indicator (CCFI) is proposed as a socioeconomic tool for classifying economic sectors based on GDP and employment data, differentiating sectors based on risk/reward ratio related to environmental cost and employment goals.
Journal: Ekonomický časopis
- Issue Year: 73/2025
- Issue No: 05-06
- Page Range: 256-281
- Page Count: 26
- Language: English
