Green Banking as a Tool for Environmental Risk Management in Financial Institutions

Green banking describes a paradigm shift in the banking sectors as they begin to integrate the environmental factor in the analysis of banking processes, loan policies, and deployment of funds. The banking institutions began to appreciate the relationship between business activities and the environment and their importance in climate change and environmental degradation. This paper assesses green banking finances as a form of managing environmental risks. It investigates how banks are adopting environment-friendly banking practices such as financing renewable energy and conducting environment and social risk assessments and how these practices relate to the global standards including the Equator Principles and the Sustainable Development Goals (SDGs). In addition, it evaluates the regulations, green banking and green banking best practices, and challenges in India and the world. This research paper finishes by giving guidelines on how to improve the green banking policies, increase advocacy, and how to incorporate environmental risk factors into the green appraisal system.