Assess ESG risk in corporate lending

Tieto Banktech software helps loan officers assess the ESG and climate risk profiles of corporate borrowers before granting credit.

ESG risk in lending

European environmental regulations are increasing companies’ compliance obligations, creating both direct and indirect risks for financial institutions. Tieto Banktech’s ESG and climate risk solution helps loan officers identify, assess and monitor these risks as part of the credit-granting process.

The challenge

Assess ESG risk before lending

European environmental regulations are increasing companies’ compliance obligations across both day-to-day operations and reporting. Companies that fail to fulfil their responsibilities may face fines or other measures that restrict their business.

These ESG requirements also create risks for financial institutions, particularly when borrowers operate in carbon-intensive industries subject to strict scrutiny.

Banks are keen to finance companies investing in the green shift, but they need a reliable way to assess the ESG and climate risks involved before granting credit.

The solution

Automating ESG risk assessments

Tieto Banktech’s ESG and climate risk solution helps loan officers assess companies’ compliance with climate-change regulations as part of the credit-granting process.

The module assigns potential corporate borrowers an initial risk profile based on the sector in which they operate. A parameter-based questionnaire – set and weighted by the bank – then reveals additional risk factors for the loan officer to consider.

Loan officers can also capture industry-specific challenges and opportunities arising from the green shift. All assessment data is stored for regulatory audits.

ESG risk assessment

Used by 30+ financial institutions

Tieto Banktech’s ESG and climate risk solution is used by more than 30 financial institutions in Norway to support ESG and climate risk assessments within the credit-granting process.

Financial institutions in Norway

30+

The benefits

Bring ESG into credit decisions

The module helps loan officers identify, assess and monitor ESG risks while supporting credit decisions, regulatory audits and green financing.

1

Identify and assess risk

Sector-based risk profiles and bank-defined questionnaires help loan officers identify additional ESG and climate risk factors before granting credit.
2

Support regulatory audits

Assessment data is stored for regulatory audits, providing a record of the ESG and climate risks considered during the credit process.
3

Identify green financing

The tool flags if a customer is eligible for green financing and shows how loan terms could be improved through climate-friendly adjustments to their business.

Minimal integration, maximum reach

Risk profiles assigned by the solution are aligned with the bank’s rating-interval system, so loan officers can immediately make the right assessment.

The module also has a loose integration with credit-granting facilities to speed up the loan process. It operates as a stand-alone module with few external dependencies, allowing it to be used regardless of the bank’s core IT system.

ESG and climate risk