No. 557 - The carbon footprint of Italian loans

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by Ivan Faiella and Luciano LavecchiaApril 2020

Energy and climate policies supporting the transition to a carbon-free economy may influence the value of business assets (so-called transitions risks). This paper presents a first insight on the carbon content of business loans in Italy, using three different methods to identify the sectors most exposed to transition risks.

We estimate that the carbon footprint of Italian bank loans is small compared to other European peers: the outstanding loans exposed to transition risk can be estimated (2018 data) in a range between 37 and 53 per cent of total loans 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.

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