Banks in the Eurozone are rating high-emitting companies as lower credit risks than cleaner peers, according to a University of Oxford study published in September. The research looked at internal credit data and found sectors like agriculture, electricity, and oil and gas tend to get more favorable risk ratings, while low-carbon electricity producers are rated as riskier. That pattern is a problem if capital is supposed to flow toward decarbonization. Sustainable finance experts quoted in The Banker argue the fix is not just better bank models. Because banks operate on short horizons, they are unlikely to fully price long-term climate risk on their own. The study points to outside interventions, such as regulation or policy measures, to close that gap.
