Investment Banking News
Study finds banks leading the carbon transition will reap greater profits
InvestorDaily
New research has examined the importance of measuring financed emissions and adopting a long-term strategy for the carbon transition. Banks that take a leadership position in the carbon transition could see their profits grow by up to 30 per cent, a new study by Bain & Company has found. For this profit boost to occur, the firm said that banks would need to prioritise the granular measurement of emissions associated with their lending and investment activity.
These financed emissions, Bain & Company said, represent at least 95 per cent of the overall carbon footprint of banks globally. “Many banks have the opportunity to build a more accurate baseline of emissions in their lending and other financed portfolios as there is a risk of over or underestimating financed emissions by up to double when using loan data that is not granular enough,” the firm said. “This critical but complex task of measuring financed emissions makes it challenging to understand where and when value will emerge in the carbon transition and which strategy is best for a bank to capitalise on it.”
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