Template-Type: ReDIF-Article 1.0

Author-Name: Gabor Szigel
Author-Workplace-Name: OTP Bank Nyrt.
Author-Email: Gabor.Tamas.Szigel@otpbank.hu
Author-Person:

Title: How Banks' Tasks Regarding Their Financed Carbon Footprint Is Misunderstood by EU Regulation

Abstract: Regulation in the EU makes banks responsible for the greenhouse gas (GHG)
emissions of their borrowers and thus tries to use them as leverage to nudge
polluting industries into the carbon-free transition. For lack of better alternatives,
this occurs based on metrics that are neither reliable nor robust. While welcomed
by the industry, the European Commission's recent omnibus packages aimed at
simplifying sustainability legislation will also probably not change that situation
materially. Although it is perhaps well-intended, this approach assigns banks a
task which they are not qualified for. It is unsurprising that the entire initiative
has resulted in bureaucratic formalities in banks' reports rather than substantive
progress. It is not the best way to get credit institutions engaged in the green
transition. Instead, banks should focus on what they are best at: lending, and more
specifically, on lending for projects that advance the carbon-neutral transformation
of the economy.

Classification-JEL: G21, O13, P18, Q50
Keywords: financed carbon footprint, financed greenhouse gas emission, green transition
Pages: 151-163
Volume: 25
Issue: 1
Year: 2026
File-URL: https://hitelintezetiszemle.mnb.hu/sw/static/file/fer-25-1-e3-szigel.pdf
File-Format: Application/pdf
Handle: RePEc:mnb:finrev:v:25:y:2026:i:1:p:151-163