Resource description:
This study "examines how euro area banks factor pollution-induced biodiversity risks into their lending decisions, using loan-level data from 832 banks and 5,000 major polluters". The authors find "that banks are increasingly pricing these risks by adjusting loan-to-value ratios and interest rates, particularly for firms polluting near biodiversity-protected areas or contributing to Environmental Quality Standards failures". The paper offers insight into how EU pollution and biodiversity protection legislation influences bank lending and provides "guidance on leveraging existing regulatory frameworks to address the climate-biodiversity-pollution nexus". Follow the link to the paper to find out more!
Author/Contact:
Hirschbühl, Dominik and Ceglar, Andrej and Cojoianu, Theodor and Emambakhsh, Tina and Qi, Yifan and Rho, Caterina and Hu, Elsie and Petracco Giudici, Marco and Biganzoli, Fabrizio and Jager, Alfred de and Herrero, Laura Garcia and Mandrici, Andrea and Pasqua, Carlo, The Climate-Biodiversity-Pollution Nexus: The Pricing of Environmental Credit Risks for European Industrial Polluters (2025). ECB Working Paper No. 2025/3164, Available at SSRN: https://ssrn.com/abstract=5897106 or http://dx.doi.org/10.2139/ssrn.5897106