The available evidence suggests that banks need to speed up their efforts on sustainability, but that change is indeed happening.6 Banks committed to ESG principles, such as those adhering to the Net-Zero Banking Alliance, or to the Science-Based Target initiative (SBTi),7 appear to be redirecting financial resources from brown to green firms.8 Overall, the results of these efforts are mixed, but hopefully the mechanisms will gradually improve.
Also because of data constraints, the evidence mostly concerns large borrowers, and little is known about the effects of banks’ sustainability commitments on loans to small enterprises. Another key issue concerns the profitability of sustainable investment.