SpringerLink
Log in

How Do Cooperative Banks Consider Climate Risk and Climate Change?

  • Chapter
  • First Online:
Contemporary Trends in European Cooperative Banking

Abstract

Climate change is one of the major trends that have been affecting cooperative banks in recent times. The cooperative banking sector has a central role to play in providing the finance needed to catalyse the low-carbon transition and accomplish existing climate change-related targets. The aim of this chapter is to establish the current state of knowledge about the implications of climate change for the cooperative banking sector. It examines the key features of the cooperative banks’ business model that are likely to shape the impact of climate-related risk factors on financial risks faced by cooperative banks, along with the main sets of practices that have been adopted by the largest European cooperative banks to respond to the risks and opportunities posed by a changing climate.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 149.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 199.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free ship** worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free ship** worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Similar content being viewed by others

Notes

  1. 1.

    This chapter follows the categorisation proposed by Migliorelli (2020), who considers green finance and climate finance as key components of the broader sustainable finance landscape. While green finance refers to the financial stocks and flows directed at addressing the environment-related SDGs, climate finance corresponds to the subset of green finance concerned with climate change mitigation and adaptation.

  2. 2.

    Given their prominence in the current debate over the implications of climate-related risk factors for the banking sector, the focus of this chapter is on the first two of these channels (i.e. physical and transition risks).

  3. 3.

    The main channels through which climate-related risk factors may translate into different types of financial risks for banks and other financial intermediaries are examined at greater length by Caselli and Figueira (2020).

  4. 4.

    Banks’ assets are made up mainly of loans to large, medium and small non-financial corporates.

  5. 5.

    A quantification of cooperative banks’ contribution to the diversity of ownership types in the banking systems across 17 Western European countries is provided by Caselli et al. (2020).

References

  • Aubert, M., Bach, W., Diot, S., & Vernet, L. (2019). French banking groups facing climate change-related risks. Banque de France Analyses et Synthèses, 101.

    Google Scholar 

  • Ayadi, R., Llewellyn, D. T., Schmidt, R. H., Arbak, E., & De Groen, W. P. (2010). Investigating diversity in the banking sector in Europe: Key developments, performance and role of cooperative banks. Centre for European Policy Studies.

    Google Scholar 

  • Bank of England. (2018). Transition in thinking: The impact of climate change on the UK banking sector. Prudential Regulation Authority.

    Google Scholar 

  • Basel Committee on Banking Supervision. (2020). Climate-related financial risks: A survey on current initiatives. Bank for International Settlements.

    Google Scholar 

  • Basel Committee on Banking Supervision. (2021). Climate-related risk drivers and their transmission channels. Bank for International Settlements.

    Google Scholar 

  • Battiston, S., Mandel, A., Monasterolo, I., Schütze, F., & Visentin, G. (2017). A climate stress-test of the financial system. Nature Climate Change, 7(4), 283–290.

    Article  Google Scholar 

  • Berger, A. N., Miller, N. H., Petersen, M. A., Rajan, R. G., & Stein, J. C. (2005). Does function follow organizational form? Evidence from the lending practices of large and small banks. Journal of Financial Economics, 76(2), 237–269.

    Article  Google Scholar 

  • Bevere, L., & Weigel, A. (2021). Natural catastrophes in 2020: Secondary perils in the spotlight, but don’t forget primary-peril risks. Swiss Re Institute.

    Google Scholar 

  • Brown, J. R., Gustafson, M. T., & Ivanov, I. T. (2021). Weathering cash flow shocks. Journal of Finance, 76(4), 1731–1772.

    Article  Google Scholar 

  • Carney, M. (2015). Breaking the Tragedy of the Horizon—Climate change and financial stability. 29 September 2015, Lloyd’s.

    Google Scholar 

  • Caselli, G., & Figueira, C. (2020). The impact of climate risks on the insurance and banking industries. In M. Migliorelli & P. Dessertine (Eds.), Sustainability and financial risks: The impact of climate change, environmental degradation and social inequality on financial markets (pp. 31–62). Palgrave Macmillan.

    Chapter  Google Scholar 

  • Caselli, G., Figueira, C., & Nellis, J. G. (2020). Ownership diversity and the risk-taking channel of monetary policy transmission. Cambridge Journal of Economics, 44(6), 1329–1364.

    Article  Google Scholar 

  • Cassa Centrale Banca. (2021). Consolidated non-financial statement 2020. Cassa Centrale Banca.

    Google Scholar 

  • Clerc, L., Bontemps-Chanel, A.-L., Diot, S., Overton, G., Soares de Albergaria, S., Vernet, L., & Louardi, M. (2021). A first assessment of financial risks stemming from climate change: The main results of the 2020 climate pilot exercise. Banque de France Analyses et Synthèses, 122.

    Google Scholar 

  • Cornée, S., Fattobene, L., & Migliorelli, M. (2018). An overview of cooperative banking in Europe. In M. Migliorelli (Ed.), New cooperative banking in Europe: Strategies for adapting the business model post crisis (pp. 1–27). Palgrave Macmillan.

    Google Scholar 

  • Dlugosz, J., Gam, Y. K., Gopalan, R., & Skrastins, J. (2021). Decision-making delegation in banks. Unpublished manuscript.

    Google Scholar 

  • DZ Bank (2021). 2020 Sustainability report. DZ Bank.

    Google Scholar 

  • Ergungor, O. E. (2010). Bank branch presence and access to credit in low- to moderate-income neighborhoods. Journal of Money, Credit and Banking, 42(7), 1321–1349.

    Article  Google Scholar 

  • European Association of Cooperative Banks (EACB). (2021). Key statistics—Financial indicators.

    Google Scholar 

  • European Systemic Risk Board (ESRB). (2020). Positively green: Measuring climate change risks to financial stability. European Central Bank.

    Google Scholar 

  • Ferri, G., Kalmi, P., & Kerola, E. (2014). Does bank ownership affect lending behavior? Evidence from the euro area. Journal of Banking and Finance, 48, 194–209.

    Article  Google Scholar 

  • Financial Stability Board (FSB). (2020). The implications of climate change for financial stability.

    Google Scholar 

  • Groeneveld, H., & Llewellyn, D. T. (2012). Corporate governance in cooperative banks. In J. Mooij & W. W. Boonstra (Eds.), Raiffeisen’s footprint: The cooperative way of banking (pp. 19–35). VU University Press.

    Google Scholar 

  • Groupe BPCE (2021). 2020 Universal registration document and annual financial report. Groupe BPCE.

    Google Scholar 

  • Hsiang, S., Kopp, R., **a, A., Rising, J., Delgado, M., Mohan, S., Rasmussen, D. J., Muir-Wood, R., Wilson, P., Oppenheimer, M., Larsen, K., & Houser, T. (2017). Estimating economic damage from climate change in the United States. Science, 356(6345), 1362–1369.

    Article  Google Scholar 

  • Iccrea Group. (2021). Dichiarazione Consolidata di Carattere Non Finanziario 2020.

    Google Scholar 

  • Intergovernmental Panel on Climate Change (IPCC). (2014). Climate change 2014: Synthesis report. IPCC.

    Book  Google Scholar 

  • International Cooperative Banking Association (ICBA). (2020). Regulation and sustainability of cooperative banks: A cross country study. International Cooperative Alliance.

    Google Scholar 

  • Ivanov, I. T., Macchiavelli, M., & Santos, J. (2020). Bank lending networks and the propagation of natural disasters. Unpublished manuscript.

    Google Scholar 

  • Kamdem-Fotso, L., Ngouadje, A., & Ermeneux, M. (2020). How banks are responding to the financial risks of climate change. Mazars.

    Google Scholar 

  • Koetter, M., Noth, F., & Rehbein, O. (2020). Borrowers under water! Rare disasters, regional banks, and recovery lending. Journal of Financial Intermediation, 43, 100811.

    Google Scholar 

  • Lamperti, F., Bosetti, V., Roventini, A., & Tavoni, M. (2019). The public costs of climate-induced financial instability. Nature Climate Change, 9(11), 829–835.

    Article  Google Scholar 

  • Lindsey, R. (2020). Climate change: Atmospheric carbon dioxide.

    Google Scholar 

  • Lindsey, R. (2021). Climate change: Global sea level.

    Google Scholar 

  • Lindsey, R., & Dahlman, L. (2021). Climate change: Global temperature.

    Google Scholar 

  • Lindsey, R., & Scott, M. (2021). Climate change: Arctic sea ice.

    Google Scholar 

  • Llewellyn, D. T. (2017). Conversion from stakeholder value to shareholder value banks: The case of UK building societies. In J. Michie, J. R. Blasi, & C. Borzaga (Eds.), The Oxford handbook of mutual, co-operative, and co-owned business (pp. 550–569). Oxford University Press.

    Google Scholar 

  • Migliorelli. (2020). The sustainability-financial risk nexus. In M. Migliorelli & P. Dessertine (Eds.), Sustainability and financial risks: The impact of climate change, environmental degradation and social inequality on financial markets (pp. 1–29). Palgrave Macmillan.

    Chapter  Google Scholar 

  • Migliorelli, M., & Marini, V. (2020). Sustainability-related risks, risk management frameworks and non-financial disclosure. In M. Migliorelli & P. Dessertine (Eds.), Sustainability and financial risks: The impact of climate change, environmental degradation and social inequality on financial markets (pp. 93–118). Palgrave Macmillan.

    Chapter  Google Scholar 

  • Monnin, P. (2018). Integrating climate risks into credit risk assessment: Current methodologies and the case of central banks corporate bond purchases. CEP Discussion Notes, 4.

    Google Scholar 

  • Nationwide. (2021). Annual report and accounts 2021. Nationwide.

    Google Scholar 

  • Noth, F., & Schüwer, U. (2018). Natural disaster and bank stability: Evidence from the U.S. financial system. SAFE Working Paper Series, 167.

    Google Scholar 

  • OP Asset Management (2020). OP Asset Management issues new review of climate-related risks and opportunities of investments in line with TCFD recommendations. 17 June 2020.

    Google Scholar 

  • OP Corporate Bank. (2021). Green bond report.

    Google Scholar 

  • OP Financial Group. (2020). OP transitioning to emissions-free heating. 10 June 2020.

    Google Scholar 

  • OP Financial Group. (2021). OP financial group’s year 2020. OP Financial Group.

    Google Scholar 

  • OP Real Estate Asset Management. (2021). OP Real Estate Asset Management published their Sustainability Report 2020—The roadmap to carbon neutrality shows concrete measures. 3 March 2021.

    Google Scholar 

  • Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. Journal of Finance, 49(1), 3–37.

    Article  Google Scholar 

  • Porretta, P., & Benassi, A. (2021). Sustainable vs. not sustainable cooperative banks business model: the case of GBCI and the authority view. Risk Governance and Control: Financial Markets and Institutions, 11(1), 33–48.

    Google Scholar 

  • PwC. (2020). Rising to the challenge: Climate risk in the UK banking sector.

    Google Scholar 

  • Rabobank. (2021a). Annual report 2020. Rabobank.

    Google Scholar 

  • Rabobank. (2021b). Our impact in 2020. Rabobank.

    Google Scholar 

  • Raiffeisen Switzerland. (2021). Rapporto di Gestione 2020. Raiffeisen Switzerland.

    Google Scholar 

  • Ramani, V. (2020). Addressing climate as a systemic risk: A call to action for U.S. financial regulators. Ceres.

    Google Scholar 

  • Rehbein, O., & Ongena, S. (2020). Flooded through the back door: The role of bank capital in local shock spillovers. Swiss Finance Institute Research Paper Series, 20-07.

    Google Scholar 

  • Schüwer, U., Lambert, C., & Noth, F. (2019). How do banks react to catastrophic events? Evidence from Hurricane Katrina. Review of Finance, 23(1), 75–116.

    Article  Google Scholar 

  • Venanzi, D., & Matteucci, P. (2021). The largest cooperative banks in Continental Europe: A sustainable model of banking. International Journal of Sustainable Development and World Ecology, 1–14.

    Google Scholar 

  • Vermeulen, R., Schets, E., Lohuis, M., Kölbl, B., Jansen, D.-J., & Heeringa, W. (2018). An energy transition risk stress test for the financial system of the Netherlands. DNB Occasional Studies, 7.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Centre for Business Research, Cambridge Judge Business School, University of Cambridge, Cambridge, CB2 1QA, UK

    Giorgio Caselli

Authors
  1. Giorgio Caselli
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Giorgio Caselli .

Editor information

Editors and Affiliations

  1. IAE of the University Paris 1 Panthéon-Sorbonne (Sorbonne Business School), Paris, France

    Marco Migliorelli

  2. IAE of the University Paris 1 Panthéon-Sorbonne (Sorbonne Business School), Paris, France

    Eric Lamarque

Rights and permissions

Reprints and permissions

Copyright information

© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Caselli, G. (2022). How Do Cooperative Banks Consider Climate Risk and Climate Change?. In: Migliorelli, M., Lamarque, E. (eds) Contemporary Trends in European Cooperative Banking. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-98194-5_9

Download citation

  • DOI: https://doi.org/10.1007/978-3-030-98194-5_9

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-030-98193-8

  • Online ISBN: 978-3-030-98194-5

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation