(An Autonomous Apex Institute Established by RBI & Banks)
(An Autonomous Apex Institute Established by RBI & Banks)
A firm-level panel data analysis of selected BSE top 200 companies for 2017–21 is presented to link the environmental, social, and governance ratings and carbon dioxide emissions with their default risk and solvency position. The results indicate strong empirical evidence that the firm’s risk of default is linked to its environmental performance along with the level of carbon emission. The findings will enable banks to establish a linkage between credit risk and climate change risk. This will assist banks as well as policymakers to adjust borrower-level ratings and factor the impact of climate change on their capital as well as business decisions.