This study investigates the exposure of Brazilian banks to sectors with a higher sensitivity to climate-related risks. For this purpose, by aligning the novel Sectoral Environmental Risk Index with the International Finance Corporation’s methodology, this research empirically analyzes more than 90 % of Brazilian banks’ credit data. The main objective is to determine whether Brazilian banks expand their portfolios toward environmentally friendly sectors. Based on the findings, there is a positive association between growth credit and portfolios in such sectors, with a persistent effect over time. The results also provide valuable insights for policymakers and stakeholders aiming to foster sustainable finance practices by challenging the access to credit for polluting economic sectors.
