Keywords
ESG risk management
ESG risk measurement
carbon footprint
bank
How to Cite
Abstract
The concept of sustainable development has been gaining importance and increasing society's awareness of the need to stop climate change, inequality, social exclusion, and inappropriate corporate practices. Banks increasingly integrate ESG objectives into their business activity. However, it is associated with their exposure to a new type of risk – the ESG risk. ESG risk management for banking institutions has now become not only a fashion and trend but an obligation that they have to fulfil. The main aim of the article is to identify ESG risk and methods of quantification, as well as to assess the exposure to ESG risk of commercial banks in Poland. That’s why the paper presents an in-depth literature review in the field of ESG concept and ESG risk in banks. Then, it describes the adopted methodology of the empirical research. The third section covers a presentation of the obtained results, which include the analysis of ESG risk exposure of the largest banks in the world and selected commercial banks in Poland, mainly based on the volume of the carbon footprint they generate and finally, ESG risk ratings for Polish banks. The following research methods were used in the article: literature studies, case study analysis, observation methods and synthesis methods. The empirical research that was conducted allowed the verification of the research hypothesis, stating that commercial banks in Poland are aware of the need to measure and monitor ESG risk increases. The research indicated that some of the banks in Poland are at an advanced stage of ESG risk management, while the rest of them are just starting their activities in this area. Currently, banks' involvement in ESG issues globally is one of the leading market trends. It becomes not only an option but an imperative for institutions wishing to maintain their market position. Therefore, commercial banks in Poland can and should participate in the implementation of sustainable development assumptions in the coming years.
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