The flip side of risk is opportunity. It is becoming ever more obvious that climate change will transform the global economy as the needs and wishes of consumers and businesses change. Put differently, the global economy needs to be transformed dramatically to address climate change. Massive amounts of funds will need to be made available. This creates new business opportunities for banks. And these business opportunities are vast. They stretch from mere additional loans or bonds to providing financing for the economic transition to all other areas of the banking business, i.e. savings, asset management, treasury, capital markets and M&A. To reach carbon neutrality by 2050, EU countries are estimated to require EUR 180 to 260 bn in new funds—each year.
Read more on the aspect of opportunities for banks in our exclusive interview with Prof. Bhattacharya, H.J. Zoffer Chair in Sustainability and Ethics at the Katz Graduate School of Business, University of Pittsburgh: „There is huge scope for expert advice and client services from banks".
Together with our clients, we are working on finding solutions to all of the three dimensions highlighted before: regulation, risk and reward. We are currently engaged in a variety of projects and activities that range from offering simple information sessions to extensive design-thinking workshops about the relevance and impact of climate change on an institution. Moreover, we are developing methods and concepts for risk measurement, reporting and regulatory disclosure. Last, but not least, many of our discussions are focusing on business opportunities related to climate change—be they investment-related or driven by funding and financing needs. Our experts are more than happy to exchange views and experiences on this or any related topics.
Climate change and its impact on banks is also one of the main topic of our European Banking Study 2020 (EBS). Our industry-leading study provides further insights, detailed analyses and straightforward recommendations for financial-industry executives. In a nutshell: We may not yet know all the details on how to tackle climate change. But we do know how to help banks to reduce risks, adapt to new regulations and find rewarding new business opportunities.