The Carbon Footprint of Italian Loans

26 Pages Posted: 28 May 2020

Date Written: April 27, 2020

Abstract

This article presents a first insight on the carbon content of business loans in Italy, using three different methods to identify the sectors more exposed to transition risks. According to our estimates, the loans’ carbon footprint of Italian banks is small compared to other European peers and the outstanding loans exposed to transition risk can be estimated in a range between 37 and 53 percent of total loans as of 2018 data, according to the methodology used. This information can be used as a starting point to evaluate, within a climate-scenario framework, how different climate policies influence the stability of the banking sector.

Keywords: climate change, financial stability, climate stress test, transition risk

JEL Classification: Q54, G21, G28

Suggested Citation

Faiella, Ivan and Lavecchia, Luciano, The Carbon Footprint of Italian Loans (April 27, 2020). Bank of Italy Occasional Paper No. 557, Available at SSRN: https://ssrn.com/abstract=3612761 or http://dx.doi.org/10.2139/ssrn.3612761

Ivan Faiella

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Luciano Lavecchia (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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