I welcomed a new community member yesterday who works in a sustainability unit in a bank and we had an interesting discussion on what sustainaibility really means for banks and their loan portofolios.
That got me thinking about how banks might have specific challenges and opporutnities around sustainability and ESG. Then found this interesting "Fires, Floods and Loans" article by Bain & Company. It's a 9 min read.
Key points:
- Wildfires, droughts, and other climate-related perils threaten banks' loan portfolios, yet many have only a general sense of their vulnerabilities.
- We expect real estate assets' exposure to physical risk to rise over the next couple of decades, likely reducing the value of collateral and damaging banks' mortgage business profitability.
- Banks that take the right steps soon could improve their financial stability, customer retention, and compliance with emerging regulatory standards.
- Measuring physical risk requires new tools, capabilities, forecasting horizons, and data-all of which have been challenging to source and embed.
This article is a part of Bain's CEO's guid on Sustainability (attached here). We can all be "ceo"s of our lives and professional careers - so I thought I'd share it here too.
We have members from banks in our community - would be interesting to hear your thoughs on this?
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Aya Pariy
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