Climate risks in Latin America and the Caribbean: Are banks ready for the green transition?
Year: 2023
Content-Type: Report
Description: This paper starts by analysing climate risks in Latin America and the Caribbean following the methodology developed by Ferrazzi et al. Then expand the analysis to understand what these risks imply for the financial sector. It focus on banks, as they represent the bulk of financial intermediation in the region. The banking sector is directly affected by country-level climate risks (physical and transition risk), but the magnitude of these risks is also affected by their exposure to different economic sectors. A bank in a country with low climate risk might be highly exposed if its loan portfolio is mostly directed to high-risk sectors. Similarly, climate risk in a bank in a high-risk country might be relatively well mitigated if its exposure is concentrated in lower-risk sectors. Are banks in Latin America and the Caribbean capable of mobilising much-needed resources for the green transition? Are they well positioned to respond to climate risks while preserving financial sector stability and providing access to finance for private sector enterprises? These are some of the questions that are discussed in this work.
Pages: 38 pages
Author: Marchitto, Barbara; Conde, Joana; Santos, Ricardo; de Nicola, Carlo; Ferrazzi, Matteo; Baldini, Alfredo; Pal x, Rozalia; Parigi, Eugenio; Bermingham, Colin
Categories: Climate / Resilience, Developing countries, Environment / Ecosystem, Investments, Public banks, Publications, Sustainability
Tags: Climate Finance, Green Finance, Investment, Public Development Banks, Risk Management