Post by sweetpea33 on Jan 25, 2024 4:41:06 GMT
A sustained relationship gives banks private information about their clients and reinforces loyalty because it isn't easy for clients to prove their creditworthiness to other banks. Banks can help clients make the business case for change (and reduce their own risk) by adjusting the pricing of products and services to match the level of climate risk their clients face. Banks also can help clients by providing transition finance — many firms’ decarbonization plans will require significant injections of capital.
Finance are approaches that can help clients in all sectors lower their climate risk, other engagement considerations (material issues, due Email List diligence procedures, data availability, level of sophistication, technology pathways) might vary depending on the sector. As a result, banks need to prioritize certain sectors, at least in the near term. While the most important criteria that banks should use to decide which sectors to prioritize are their level of financial exposure to a given sector and the level of climate risk that sector faces, the extent of relationship banking in a sector is also important. In sectors with high levels of relationship banking, additional value is at risk beyond what’s on the balance sheet.
It may take longer to move away from certain clients in these sectors if engagement isn’t successful. Conversely, high levels of relationship banking in a sector may allow engagement to move faster and have a higher chance of success, not only because a bank might have more leverage in these situations but also because of pre-existing trust and connectivity. Recommendation: Banks should adjust their sectoral engagement strategies based on the level of relationship banking in each sector.
Finance are approaches that can help clients in all sectors lower their climate risk, other engagement considerations (material issues, due Email List diligence procedures, data availability, level of sophistication, technology pathways) might vary depending on the sector. As a result, banks need to prioritize certain sectors, at least in the near term. While the most important criteria that banks should use to decide which sectors to prioritize are their level of financial exposure to a given sector and the level of climate risk that sector faces, the extent of relationship banking in a sector is also important. In sectors with high levels of relationship banking, additional value is at risk beyond what’s on the balance sheet.
It may take longer to move away from certain clients in these sectors if engagement isn’t successful. Conversely, high levels of relationship banking in a sector may allow engagement to move faster and have a higher chance of success, not only because a bank might have more leverage in these situations but also because of pre-existing trust and connectivity. Recommendation: Banks should adjust their sectoral engagement strategies based on the level of relationship banking in each sector.