Explore the evidence.
Understand the reach.

As extreme weather events continue to impact every continent and the world moves towards establishing a lower-carbon economy, the banking industry is expected to incorporate climate risk into their risk management practices. Climate change poses significant risks to bank loan portfolios through increased physical and transition risks. This study systematically analysed the literature to identify effective strategies for managing these risks. Our findings reveal that climate-related events can lead to substantial loan defaults and credit losses. To mitigate these impacts, banks can integrate climate risk into their risk management frameworks, adopt sustainable lending practices, and diversify their portfolios. Some banks have already implemented measures to mitigate climate risk through insurance policies, while others are incorporating sustainability criteria into their lending practices, such as financing green projects. By proactively addressing climate risks, banks can protect their portfolios, enhance financial resilience and contribute to a low-carbon economy.

The Paris Agreement has highlighted the worldwide significance of adaptation. Many investors are considering the effects of climate change and resource scarcity when making decisions. Even while the whole amount of the environmental harm caused by climate change is yet unknown, recent scientific evidence is more frightening, and many governments are taking substantial measures to avert a calamity. The financial innovations and mechanisms created to ease the transition to a low-carbon economy will have far-reaching effects on markets, firms, intermediaries, and investors. Although economists have been working on the subject for decades, financial-economics professionals have only recently become interested in climate change. There has been a growing body of empirical and theoretical contributions in recent years that analyse the influence of climate risks on investment decisions for firms, financial intermediaries, and national governments, as well as the pricing and hedging of climate change risks. This study seeks to establish the role of multilateral climate change financing in the developing world vis-à-vis challenges and opportunities for Africa. Five determinants of the multilateral climate fund were established and they are namely; Reduction of Greenhouse gas emissions, Enabling Environments, Poverty and development linkages, Private investment and Public climate finance.

A collage of environmental challenges in South Africa have stimulated the growing interest for greener practices. Notwithstanding the generic antecedents of green practices in the existing literature, little is known if water and energy consumption matter to investors who are going green. Thus, we seek to investigate if water and energy consumption influences investors’ green practices in South Africa. We adopt a positivist stance and employ a quantitative research approach to achieve the set objective. We draw archival data from companies that constitute the FTSE/JSE Responsible Investment Index given their environmental impact. We generate a short panel data set of 19 FTSE/JSE RII companies with a six-year period resulting in 114 observations to statistically conduct the analysis. Given stationarity of all endogenous variables at I(1), we adopt first differenced econometric models namely Panel Vector Autoregression Model (PVAR) for Random Effects Generalized Least Squares (GLS) regression and Random Effects Maximum Likelihood Estimator (MLE) to generate more robust results generalisable to the entire population. We find a statistically significant negative effect of water and energy consumption on investor share ownership. Thus, we posit that corporate water and energy consumption may not be the primary antecedents of investors’ sustainability practices in South Africa. This paper agitates for future research studies to pursue the same enquiry using sustainability variables other than water and energy consumption.

A collage of environmental challenges in South Africa have stimulated the growing interest for greener practices. Notwithstanding the generic antecedents of green practices in the existing literature, little is known if water and energy consumption matter to investors who are going green. Thus, we seek to investigate if water and energy consumption influences investors’ green practices in South Africa. We adopt a positivist stance and employ a quantitative research approach to achieve the set objective. We draw archival data from companies that constitute the FTSE/JSE Responsible Investment Index given their environmental impact. We generate a short panel data set of 19 FTSE/JSE RII companies with a six-year period resulting in 114 observations to statistically conduct the analysis. Given stationarity of all endogenous variables at I(1), we adopt first differenced econometric models namely Panel Vector Autoregression Model (PVAR) for Random Effects Generalized Least Squares (GLS) regression and Random Effects Maximum Likelihood Estimator (MLE) to generate more robust results generalisable to the entire population. We find a statistically significant negative effect of water and energy consumption on investor share ownership. Thus, we posit that corporate water and energy consumption may not be the primary antecedents of investors’ sustainability practices in South Africa. This paper agitates for future research studies to pursue the same enquiry using sustainability variables other than water and energy consumption.

As extreme weather events continue to impact every continent and the world moves towards establishing a lower-carbon economy, the banking industry is expected to incorporate climate risk into their risk management practices. Climate change poses significant risks to bank loan portfolios through increased physical and transition risks. This study systematically analysed the literature to identify effective strategies for managing these risks. Our findings reveal that climate-related events can lead to substantial loan defaults and credit losses. To mitigate these impacts, banks can integrate climate risk into their risk management frameworks, adopt sustainable lending practices, and diversify their portfolios. Some banks have already implemented measures to mitigate climate risk through insurance policies, while others are incorporating sustainability criteria into their lending practices, such as financing green projects. By proactively addressing climate risks, banks can protect their portfolios, enhance financial resilience and contribute to a low-carbon economy.

The Paris Agreement has highlighted the worldwide significance of adaptation. Many investors are considering the effects of climate change and resource scarcity when making decisions. Even while the whole amount of the environmental harm caused by climate change is yet unknown, recent scientific evidence is more frightening, and many governments are taking substantial measures to avert a calamity. The financial innovations and mechanisms created to ease the transition to a low-carbon economy will have far-reaching effects on markets, firms, intermediaries, and investors. Although economists have been working on the subject for decades, financial-economics professionals have only recently become interested in climate change. There has been a growing body of empirical and theoretical contributions in recent years that analyse the influence of climate risks on investment decisions for firms, financial intermediaries, and national governments, as well as the pricing and hedging of climate change risks. This study seeks to establish the role of multilateral climate change financing in the developing world vis-à-vis challenges and opportunities for Africa. Five determinants of the multilateral climate fund were established and they are namely; Reduction of Greenhouse gas emissions, Enabling Environments, Poverty and development linkages, Private investment and Public climate finance.