Green Banking

About Green Banking

Green banking incorporates environmental considerations into lending and investment decisions. The Equator Principles, launched in 2003, committed banks to environmental and social risk assessment of project finance. The Principles for Responsible Banking, launched in 2019, committed signatory banks to align with the Paris Agreement. The Glasgow Financial Alliance for Net Zero, launched in 2021, includes over 450 banks and insurers. Critics argue that green banking commitments are often greenwashing, with banks continuing to finance fossil fuels. Banks have exited the Net Zero Banking Alliance under pressure, particularly after political backlash in the US. The measurement and verification of green banking commitments remains challenging. Despite criticism, environmental risk is increasingly incorporated into mainstream banking decisions.