Environmental regulations as a framework for environmental risk management in banks

Abstract

The aim of the considerations in the chapter is a synthetic overview of environmental regulations, voluntary initiatives of banks in the field of ESG issues, and EU regulations in the field of environmental risk, in the context of the standardization of the environmental risk management process in a bank. Environmental regulations affect the activities of economic entities, and the actions taken by these entities affect customers, counterparties, and consumers or the banks financing their activities. In the case of banks, within the framework of various international or regional institutions and structures, numerous activities are undertaken to set standards for measuring and managing environmental risk. Recently, research and analysis in this area have been intensified, initiatives have been taken to develop guidelines, and standards and prudential regulations have begun to be introduced to protect banks from environmental and social risks. They are conducive to the development and improvement of the ESG risk measurement and management methodology.