Prospects and Hurdles in Transition towards ESG linked Sustainable Lending to achieve Resilience against Environment Risk

Abstract

The drive to sustainability is transforming the way we live. In the wake of deteriorating environment sustainable and inclusive economy is the need of the hour and has become essential to implement in any field possible. In the recent years sustainable finance has come to dominate many investments decision and has an impact on the way funds are mobilised. One aspect of sustainable finance is sustainable lending which covers a range of activities that play a key role in credit decisions. Sustainable lending enhances and encourages environmentally sustainable practices and hence contributing to Environmental-Social -Governance (ESG) framework in lending. Global leaders are focusing on lending in sustainable companies and projects to create long term value for community. This paper is an endeavour to study the opportunities that sustainable lending offers to banking sector. The paper highlights the global best practices in sustainable lending adopted by frontrunners and analyse the business model and technologies associated with this.  In descriptive study the paper brings out the challenges faced by firms in adopting models linking sustainability in their commercial lending activities. Moreover, the aspect that is not only financing through ESG lens but which is more than financial returns are bought into light.