ESG for Commercial Lenders

This course examines how ESG (environmental, social, and governance) factors influence risk assessments and credit decisions for private, small, and middle-market commercial lenders. ESG factors can affect a company’s ability to service debt obligations but are often either overlooked or misinterpreted. Further, many financial institutions face a disconnect between actions at the individual borrower level and the lender’s own ESG profile, including how to manage messaging to stakeholders. This course is aimed to help credit professionals understand the impact that sustainability practices—or a lack thereof—can have on a company’s risk profile and disclosure practices.

Learn how climate risks may affect business operations as well as its physical collateral, and how changes to a borrower’s reputation can impact its supply chain and financial results. The course also includes an interactive case study that lets you analyze a borrowing client and conduct downside sensitivity analysis in Excel using an ESG lens.

Learning objectives
Explain why ESG risks should be a material consideration for commercial lenders.
Define how financed emissions influence a lender’s own ESG disclosures.
Calculate a borrower’s attribution factor using PCAF standards.
Explain systems thinking and how it relates to ESG integration and credit risk.
Integrate ESG factors into a financial model and calculate adjusted financial ratios for an example borrower.
Identify trends and future strategies for incorporating ESG into credit risk analysis.