This bachelor's thesis addresses the integration of ESG ratings into the creditworthiness assessment of banks, a topic that is highly relevant given climate change and the increasing importance of sustainable financial practices. Traditional credit assessments primarily rely on financial metrics and historical repayment profiles. However, the growing significance of ESG factors represents a significant expansion of these evaluation models. The central problem lies in the challenge of effectively quantifying ESG criteria and integrating them into existing assessment models to enable a more comprehensive risk assessment. This raises critical questions regarding the adaptability of traditional models, the validity and reliability of ESG ratings, and the long-term impacts on lending practices. The thesis is divided into several chapters, each providing a detailed analysis of the integration of ESG ratings into creditworthiness assessments. Following the introduction, which outlines the issue of climate change and its impact on the financial sector, the second chapter explains the concept of sustainability and its historical development. Key political frameworks, such as the Paris Climate Agreement and the United Nations Sustainable Development Goals, which set the framework for sustainable development in the financial sector, are described. The third chapter examines the traditional lending process and illustrates how sustainability risks can be integrated. Chapter four discusses various types of ratings, including external and internal credit ratings, and their linkage with ESG ratings. The fifth chapter explores the significance of ESG factors as early indicators of a company's financial performance. Finally, the sixth chapter summarizes the key findings and provides an outlook on future developments in the area of ESG ratings and their integration into creditworthiness assessments. The investigation demonstrates that ESG ratings are an indispensable tool for modern creditworthiness assessments. They offer a holistic approach to evaluating corporate risks and opportunities that goes beyond traditional financial metrics. By considering ESG factors, companies can become more sustainable and resilient, contributing to a more stable and responsible financial economy in the long term. It becomes evident that the integration of ESG ratings makes risk assessments more comprehensive and helps banks make sustainable financing decisions. Recommendations include the development of unified standards and the improvement of data quality to enhance the comparability and reliability of ESG ratings. The thesis highlights the necessity for banks and financial institutions to adjust their internal processes and closely collaborate with rating agencies and companies to comprehensively evaluate ESG risks and opportunities.
Date of Award | 2024 |
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Original language | German (Austria) |
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Supervisor | Dietmar Buchner (Supervisor) |
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Die Kreditwürdigkeitsprüfung im Wandel: Wie ESG-Ratings das traditionelle Bankgeschäft neu definieren
Marschallinger, D. (Author). 2024
Student thesis: Bachelor's Thesis