Objective: If and when the climate change risk accentuates, there could be sharp and large scale deterioration in the quality of assets on the books of financial intermediaries. Immediate and sweeping regulatory changes, triggered by such crisis, could acutely exacerbate business risk. The risk could still remain significant even if ‘grandfathering’ clauses are embedded in new regulations, because the aggregate cost of managing the deep and widespread disruption caused both by climate change and new regulations will be quite high.    

Therefore, there is an imperative need to develop long term banking and lending strategies, to redirect banking as well as lending practices towards responsible and yet commercially viable businesses. Also, from a unique governance perspective, banks, FIs and NBFCs need to expose themselves to green bond markets, which fund financial intermediaries for their operations, potentially reducing their own and their customers’ carbon footprints.  In this context, banks must redesign their risk management processes to undertake differentiated and alternative risk assessment methods. Accordingly, their asset portfolios should be incrementally rebalanced and new portfolios built to make them greener, responsible and sustainable.

Highlights

This Virtual Conference (VC) will discuss the following:

• Economics of sustainable finance, bank resilience and financial stability
• Current asset portfolios of banks - potential contribution of banks to environmental pollution, ecological degradation and climate change risk
• Strategy and policy for incremental growth in credit portfolios,   rebalancing of existing portfolios and building of new portfolios- case studies
• Evolving regulatory approaches and regulatory changes vis-a-vis climate change risk - scenarios and responses.
• Risk management for green finance
• A case for green portfolios from commercial and responsible lending perspectives