![Banks mask lending to polluters with PR greenwash, ECB blog says](https://i-invdn-com.investing.com/trkd-images/LYNXMPEJB50C8_L.jpg)
© Reuters. FILE PHOTO: A view of the European Central Bank (ECB) headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo
FRANKFURT (Reuters) – Euro zone banks speaking essentially the most about local weather change are the largest lenders to polluting industries and use public relations noise to masks their assist, a weblog submit by 4 economists printed by the European Central Bank (ECB) mentioned on Wednesday.
The ECB has been attempting and failing for years to drive lenders to reveal extra of their local weather threat, and has threatened to extend capital necessities if they do not.
“Banks which portray themselves as more environmentally conscious lend more than others to brown industries,” the weblog submit argued, after matching up public disclosures with detailed lending knowledge. “There are insufficient incentives for banks to change their lending policies.”
The weblog, written by an ECB economist and three teachers, doesn’t essentially signify the views of the ECB, which supervises over 100 of the euro zone’s largest lenders.
The mismatch between communication and precise lending is particularly true for brand spanking new funds to smaller polluters, as these fly under the radar and would escape the general public’s consideration, the weblog mentioned.
Banks seem reluctant to lend to younger corporations that would doubtlessly drive innovation in cleaner applied sciences or high-emission firms that would inexperienced their enterprise, it added.
Lenders seem reluctant to disrupt consumer relationships and in addition appear fearful {that a} withdrawal of their assist would threaten the monetary viability of the borrower, leaving them with losses, the weblog mentioned.
This creates a loop wherein polluters are stored alive by a banks seeking to shield their earnings, perpetuating each the air pollution and banks’ assist for a unclean business, it mentioned.
“Banks with high environmental disclosure, indeed, tend to lend not only to brown borrowers with whom they have exclusive relationships, but also to those with limited financing options and who would be in distress if their banking relationship were terminated,” the weblog mentioned.
Banks as an alternative want to maintain corporations alive, although they clearly lack both the operational or monetary capability to change to greener applied sciences, it mentioned.