Significant developments in the implementation of ESG in the strategy of Europeans banks : How should climate risk be integrated in the risk taxonomy & should it be linked to regulatory capital of banks?

Details

Supervisors

Candelon, Bertrand

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

Our study focuses on developments in the implementation of ESG strategies in the banking sector. We will attempt to answer two questions: how should climate risk be integrated into the risk taxonomy & should it be linked to regulatory capital of banks? To try answer to these two questions, we will first carry out a literature review, analysing the main works, annual reports, etc. published by various Belgian and European banks. We will then explore the various guides and documents published by the ECB before analysing the documents and stress test carried out by one of these banks. We will continue our study by selecting methodological frameworks. Ineed, we have chosen two different frameworks: one for the qualitative analysis of the question, which will be based on various interviews with banking professionals, and the other methodology, which will be used for the quantitative analysis, which will be a stress test to assess the stability of the bank analysed in the face of climate risks combined with geopolitical risks. Using these two approaches, we will attempt to answer our two questions by developing recommendations for banks, while presenting the limitations of our analyses.