University of Twente Student Theses
Terra Methodology Refinement: A Proposal of New Methodologies to Measure the Performance of Cement, and Automotive Sectors
Cho, Halyn (2023) Terra Methodology Refinement: A Proposal of New Methodologies to Measure the Performance of Cement, and Automotive Sectors.
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| Abstract: | Climate change has become a major risk for banks . As a member of the Net-Zero Banking Alliance (NZBA), ING is adopting the so-called Terra approach towards net-zero goals in the most carbon intensive parts of its portfolio In this paper, we focus on the significance of the measurement methodology of the Terra approach, which is based on outstanding, which refers to the loan that has not fully repaid from the clients. We analyse the stability and volatility of the current measurement methodology from a comprehensive view of portfolio compositions in different sectors. We analyse the portfolio emission intensities based on outstanding , exposure at default (EAD) , and lending limit and address choices of emission intensity metrics to enable the net zero transition more effectively. Based on the analysis, we illustrate the proposal of a new metric for the Terra approach with a four-year observation in the cement sector’s emission intensities and a three-year observation in the automotive sector. To improve the current measurement methodology, we analyse portfolio emission intensities and portfolio compositions to quantifying the intentionality of ING to steer its portfolios towards net-zero goal. Choosing a metric should be considered in terms of volatility, feasibility to steer the portfolio and the reflection of ING’s actions on the results, and limit utilisation. |
| Item Type: | Essay (Bachelor) |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Subject: | 50 technical science in general |
| Programme: | Industrial Engineering and Management BSc (56994) |
| Link to this item: | https://purl.utwente.nl/essays/96566 |
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