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2023 | OriginalPaper | Chapter

3. ESG Innovation in the Financial Industry

Authors : Egidio Palmieri, Enrico Fioravante Geretto

Published in: Adapting to Change

Publisher: Springer Nature Switzerland

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Abstract

This chapter analyses the integration of Environmental, Social, and Governance (ESG) factors in the financial sector. It highlights the link between credit policies and ESG practices in shaping sustainable finance. The chapter examines how ESG factors influence firm risk and profitability, noting that better ESG performance can lead to reduced risk and more favourable loan conditions. The impact of ESG scores on the bank-firm relationship is also explored, revealing that strong ESG performance may result in better lending terms and improved access to capital. Despite these findings, there is a noted gap in research on the market reactions to banks’ ESG performance. The chapter concludes by discussing the European Banking Authority's guidelines on incorporating ESG factors in banking, emphasizing the need for sustainable and risk-sensitive lending practices in the financial industry.

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previous chapter The Determinants of Bank-Firm Relationships: Overview, Evolution, and Challenges
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Metadata
Title
ESG Innovation in the Financial Industry
Authors
Egidio Palmieri
Enrico Fioravante Geretto
Copyright Year
2023
Book
Adapting to Change

Print ISBN: 978-3-031-50264-4

Electronic ISBN: 978-3-031-50265-1

Copyright Year: 2023

DOI
https://doi.org/10.1007/978-3-031-50265-1_3