Hungarian banking sector lags behind in green finance

Banking

Hungary's banking sector has until now "only marginally" weighed environmental sustainability and lags behind peers in Western Europe, the National Bank of Hungary (MNB) said in a report published on Wednesday, according to a report by news agency MTI.

"Until now the Hungarian financial system has only marginally integrated environmental sustainability aspects into its operation, and as a result only little 'green financial' data is available for now," MNB said in its premiere Green Finance Report, adding that just "a few percent" of Hungarian financial capital can be considered green.

Results of a banking sector survey included in the report suggest green aspects "have clearly strengthened in recent years", but Hungary's banking sector is "still seriously falling behind...euro area peers", the MNB said.

The Green Finance Report seeks to "improve transparency" and "strengthen market awareness", supporting a more accurate understanding of the financial aspects of climate changes by financial market insiders and other stakeholders in society.

MNB noted in the report that the top management at 68% of Hungarian banks "do not discuss climate risks", compared to a 25% average across the European Union.

The ratio of banks where "no information on sustainability is disclosed" stands at 45% in Hungary and just 14% for the EU as a whole.

"The available data suggest insufficient preparedness and attitude of the local financial organizations, and the volume of transition risks shows a negative trend," MNB concluded in the report.

"Serious improvement is needed for the Hungarian banks to be able to assess the volume and quality of their exposures, and to be able to take effective risk mitigation steps and prioritize sustainable financing," it added.

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