{"id":5555,"date":"2025-02-11T19:22:58","date_gmt":"2025-02-11T17:22:58","guid":{"rendered":"https:\/\/esghub.ro\/?p=5555"},"modified":"2025-05-29T13:20:06","modified_gmt":"2025-05-29T10:20:06","slug":"green-finance-and-the-impact-of-climate-risks-on-the-banking-sector","status":"publish","type":"post","link":"https:\/\/esghub.ro\/en\/finantarea-verde-si-impactul-riscurilor-climatice-asupra-sectorului-bancar\/","title":{"rendered":"NBR: Green finance and the impact of climate risks on the banking sector"},"content":{"rendered":"<p><strong><span style=\"color: #000080;\">The National Bank of Romania has published the Climate Risks for the Banking Sector in Romania - 2024, a report on the influence of climate change on the economy and the financial system. The document emphasises both the increasing share of green finance and the amplification of climate risks affecting economic sectors in Romania. The analysis provides a clear picture of the evolution of sustainable lending and the exposure of the Romanian economy to extreme weather events.<\/span><\/strong><\/p>\n<p><span style=\"color: #000080;\">From the perspective of financing institutions, climate risk is the risk associated with exposures that are vulnerable to climate change. The two components of climate risk are physical risk and transition risk. The NBR lists among the physical risks facing Romania floods, droughts and extreme temperatures, with a significant impact on the business environment and bank lending.<\/span><\/p>\n<h2><span style=\"color: #003366;\">Floods: 23 counties vulnerable in 2024<\/span><\/h2>\n<p><span style=\"color: #000080;\">On floods, the NBR identifies <strong>23 vulnerable counties<\/strong> to this phenomenon in 2024. Companies located in these areas contribute 12.7% to gross value added (GVA) and hold 13.2% of total assets. By comparison, in 2022, flood-affected companies generated 151TPTP3T of GVA and owned 13.7% of assets.<\/span><\/p>\n<p><span style=\"color: #000080;\">Gross Value Added (GVA) is the economic indicator that measures the contribution of an industry, firm or region to the national economy. It is calculated as the difference between the value of output and the cost of goods and services used to realise it. Basically, GVA reflects how much an economic activity contributes to a country's GDP growth.<\/span><\/p>\n<h2><span style=\"color: #000080;\">Drought and extreme temperatures affect over 30 counties<\/span><\/h2>\n<p><span style=\"color: #000080;\"><strong>Drought<\/strong> affects <strong>31 counties<\/strong>, with an economic impact of 2.3% of GVA. Banking exposure increased to 71TPTP3T in 2024 from 5.5% in 2023 and 7% in 2022.<\/span><\/p>\n<p><span style=\"color: #000080;\"><strong>30 counties<\/strong> were exposed in 2024 to the risk of<strong> extreme temperatures<\/strong>and affected companies generate 10.4% of GVA. Banking exposure to this phenomenon increased from 71TPTP3T in 2023 to 91TPTP3T in 2024.<\/span><\/p>\n<p><span style=\"color: #000080;\">Other physical risks identified were related to the increase in average annual temperature by 2.6\u00b0C above the historical average, as well as to<strong> deforestation<\/strong> totalling 25.1 kilohectares.<\/span><\/p>\n<p><span style=\"color: #000080;\">Faced with these challenges, green finance is becoming an important component of the banking system. The NBR report shows an increase in green lending, although it still accounts for a modest percentage of total lending. The share of green loans in total corporate loans has increased from 1.6% in 2023 to 2.9% in 2024. In the annual flow of lending, green finance accounts for 4.3%, indicating an accelerated transition towards sustainable investment. The total amount of green loans reached RON 5.7bn for companies and RON 10bn for the population.<\/span><\/p>\n<p><span style=\"color: #000080;\">Green finance is mainly directed towards energy-efficient buildings (54% of the total), sustainable transport, waste reduction and modernisation of industrial infrastructure. Another indicator of increased interest in sustainable finance is the issuance of green bonds. In 2024, 7 issues were launched totalling \u20ac8.1bn, compared to only \u20ac247m in 2022.<\/span><\/p>\n<p><span style=\"color: #000080;\">It should be noted that the NBR uses in its analyses the definition of green finance, which refers to climate lending by identifying activities that have the effect of mitigating environmental impacts or adapting to climate change.<\/span><\/p>\n<h2><strong><span style=\"color: #000080;\">Activities considered as climate funding<\/span><\/strong><\/h2>\n<ol>\n<li><strong><span style=\"color: #000080;\">Environmental impact mitigation activities<\/span><\/strong><\/li>\n<\/ol>\n<p><span style=\"color: #000080;\">Renewable energy:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\">Clean energy production (solar, wind, geothermal, biomass, etc.)<\/span><\/li>\n<li><span style=\"color: #000080;\">Improving transport and distribution mechanisms<\/span><\/li>\n<li><span style=\"color: #000080;\">Investment to develop storage systems<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000080;\">Energy efficiency:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\">Upgrading facilities in industries or changing to new ones<\/span><\/li>\n<li><span style=\"color: #000080;\">Investment in residential\/commercial\/public\/vehicle premises (Improving or replacing the car fleet)<\/span><\/li>\n<li><span style=\"color: #000080;\">Lighting, heating systems, insulation (part of energy efficiency)<\/span><\/li>\n<\/ul>\n<p><strong><span style=\"color: #000080;\">Reducing waste and waste water<\/span><\/strong><\/p>\n<p><span style=\"color: #000080;\">Transport:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\">Changing urban transport (including measures to support non-motorised transport)<\/span><\/li>\n<li><span style=\"color: #000080;\">Management measures to reduce greenhouse gas emissions (car parks, car-free zones, etc.)<\/span><\/li>\n<li><span style=\"color: #000080;\">Intra-urban rail transport offering alternatives to road\/air transport<\/span><\/li>\n<li><span style=\"color: #000080;\">Efficient and low-emission transport infrastructure<\/span><\/li>\n<\/ul>\n<p><strong><span style=\"color: #000080;\">Green buildings - funding for meeting\/achieving green building standards such as:<\/span><\/strong><\/p>\n<ul>\n<li><span style=\"color: #000080;\">IFC Certificate of Excellence in Design for High Efficiency Design Excellence (EDGE)<\/span><\/li>\n<li><span style=\"color: #000080;\">Local green building certification scheme<\/span><\/li>\n<li><span style=\"color: #000080;\">Leadership in Energy and Environmental Design (LEED) certificate issued by US Green Building<\/span><\/li>\n<li><span style=\"color: #000080;\">BRE certificate for the Building Research Environmental Assessment Method (BREEAM)<\/span><\/li>\n<li><span style=\"color: #000080;\">Bronze, silver or gold issued by the German Sustainable Building Council (DGNB)<\/span><\/li>\n<li><span style=\"color: #000080;\">RoGBC certificate or other certification<\/span><\/li>\n<\/ul>\n<p><strong><span style=\"color: #000080;\">Special environmental financing or technology investment (as per EBRD)<\/span><\/strong><\/p>\n<ul>\n<li><span style=\"color: #000080;\">Products or equipment<\/span><\/li>\n<li><span style=\"color: #000080;\">Low carbon technologies (including R&amp;D) (e.g. smart irrigation)<\/span><\/li>\n<li><span style=\"color: #000080;\">Reducing GHG emissions other than energy: fugitive emissions, carbon capture and storage, reducing emissions from industrial processes<\/span><\/li>\n<\/ul>\n<ol start=\"2\">\n<li><span style=\"color: #000080;\">Adaptation to climate change - reducing vulnerabilities to the effects of climate change and increasing adaptive capacity to the new framework<\/span><\/li>\n<\/ol>\n<ul>\n<li><span style=\"color: #000080;\">Agriculture - e.g. investments to adapt to new weather conditions and extreme climatic events through irrigation, drainage, combating and restoring soil erosion, preventing desertification, research to reduce water wastage or GHG emissions, expanding certified areas, agri-environment measures (afforestation, forest shelterbelts, cross-compliance), biomass certification, etc.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000080;\"><strong>Although green finance is growing, the exposure of companies and the banking system to climate risks remains high.<\/strong> To support the transition to a sustainable economy, the NBR report emphasises the need for additional measures, including:<\/span><\/p>\n<ul>\n<li><span style=\"color: #000080;\">extending green credit to areas such as agriculture, utilities and manufacturing<\/span><\/li>\n<li><span style=\"color: #000080;\">incentivising investment in low-emission technologies and increasing energy efficiency<\/span><\/li>\n<li><span style=\"color: #000080;\">developing insurance mechanisms to protect against climate disasters.<\/span><\/li>\n<\/ul>\n<p><span style=\"color: #000080;\">The NBR reports for the years 2022, 2023 and 2024 are available for consultation <a style=\"color: #000080;\" href=\"https:\/\/www.bnro.ro\/Publicatii-periodice-204.aspx\" target=\"_blank\" rel=\"noopener noreferrer nofollow\">here<\/a><\/span><\/p>\n<p><strong><span style=\"color: #000080;\">Sources of information<\/span><\/strong><\/p>\n<p><span style=\"color: #000080;\">National Bank of Romania (NBR) - Climate Risks for the Romanian Banking Sector - 2024<\/span><\/p>\n<p><span style=\"color: #000080;\">National Bank of Romania (NBR) - Climate Risks for the Romanian Banking Sector - 2023<\/span><\/p>\n<p><span style=\"color: #000080;\">National Bank of Romania (NBR) - Climate Risks for the Romanian Banking Sector - 2022<\/span><\/p>\n<p><span style=\"color: #000080;\">Recommendation of the National Committee for Macroprudential Supervision No R\/6\/2021<\/span><\/p>","protected":false},"excerpt":{"rendered":"<p>Banca Na\u021bional\u0103 a Rom\u00e2niei a publicat Tabloul de Monitorizare a Riscurilor Climatice asupra Sectorului Bancar din Rom\u00e2nia \u2013 2024, un raport privind influen\u021bele schimb\u0103rilor climatice asupra economiei \u0219i sistemului financiar. Documentul scoate \u00een eviden\u021b\u0103 at\u00e2t cre\u0219terea ponderii finan\u021b\u0103rilor verzi, c\u00e2t \u0219i amplificarea riscurilor climatice, care afecteaz\u0103 sectoare economice din Rom\u00e2nia. Analiza ofer\u0103 o imagine clar\u0103 [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":5556,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":26,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-5555","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-noutati"],"_links":{"self":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/5555","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/comments?post=5555"}],"version-history":[{"count":3,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/5555\/revisions"}],"predecessor-version":[{"id":5918,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/5555\/revisions\/5918"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/media\/5556"}],"wp:attachment":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/media?parent=5555"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/categories?post=5555"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/tags?post=5555"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}