ESG Influences Lending Capital! KPMG's 2026 Financial Industry Report: BNP Paribas and DBS Lead in Integrating ESG into Credit Assessment

KPMG An Hou Jian Ye today (5) released the '2026 Global ESG Risk Survey,' covering 111 banks across 23 countries. The report indicates that ESG risk management in the global financial sector has entered a 2.0 phase, evolving from past compliance-driven approaches to deep integration with risk management, credit assessment, and capital allocation. Institutions such as BNP Paribas and DBS Bank have already begun incorporating ESG into credit risk evaluation.

Lin Chuan-Hsing, Director of KPMG An Hou Sustainable Development Advisory, stated that ESG risk management in the global banking industry is shifting from a compliance-oriented model to one deeply integrated with risk management, credit assessment, and capital allocation. Amid rapidly rising emerging risks such as geopolitical tensions, cyber resilience, demographic changes, and AI development, natural risks, geopolitical risks, and challenges posed by AI have become new issues the financial industry must confront.

Lin pointed out that the proportion of banks not conducting scenario analysis is expected to decline from 42% to 30% by 2026, indicating that banks are advancing ESG risk identification from qualitative to quantitative analysis. At the same time, the AI discussion is shifting from technical risks to how to leverage AI to enhance data management and risk analysis efficiency.

The survey reveals that 85% of responding institutions prioritize climate risk, a 5% year-on-year increase. The importance of natural and biodiversity risks has also risen from 30% to 35%. The degradation of the natural environment is increasingly impacting supply chains and operational costs, gradually transforming into credit and investment risks within the financial system. However, 80% of banks identify insufficient data quality as their biggest challenge, 70% lack consistent assessment standards, and a staggering 90% have not yet established complete natural risk scenario analysis capabilities, highlighting a significant gap between regulatory expectations and industry implementation.

In terms of capital allocation, 50% of EU banks and 20% of non-EU banks have already integrated ESG risks into their Internal Capital Adequacy Assessment Process (ICAAP). BNP Paribas increases risk weights for non-transitioning companies, while DBS Bank has built a centralized ESG database for stress testing, demonstrating that ESG evaluation mechanisms are now deeply embedded in core banking risk management and credit review processes.

Moreover, AI adoption is accelerating ESG management transformation, with 75% of EU banks and 90% of non-EU banks using AI for ESG risk management, primarily focused on data collection and verification.

Di Jia-Ying, Executive Deputy General Manager of KPMG An Hou Sustainable Development Advisory, stated that the banking industry is entering an 'ESG efficiency' phase. Enterprises should focus on five key areas: establishing clear accountability, integrating ESG into core processes, leveraging AI for data management, cross-departmental collaboration, and cultivating sustainability talent. By institutionalizing and operationalizing sustainability management, organizations can enhance operational resilience and decision-making efficiency.