Bankers Face a Dirty New Temptation
Keeping derivatives out of “green asset ratio” calculations may just encourage lenders to use more of them on climate-unfriendly financing deals.
Cleaning up the assets.
Photographer: Alexandros Maragos/Moment RFThe many rules, metrics and disclosure requirements imposed on banks after the global financial crisis largely succeeded in their principal goal: making lenders safer. But a new gauge that aims to encourage lenders to do more good — by fighting climate change — may just inspire a renewed fascination with derivatives, one of the raciest parts of finance.
From as early as next year, European banks may be asked to calculate the “greenness” of their activities, or what share of their business is financing climate-friendly activities. The European Commission is drafting the final rules.