Sustainability issues, broadly denned, are increasingly relevant for financial and non-financial companies alike. The financial sector, and more specifically banks, can help mitigate environmental and social risks, and increase opportunities for responsible companies, through their roles as intermediaries. Their impact on credit markets can help society allocate resources in a more socially responsible way. Recently, research on financial institutions have shown that an important question (Weber et al (2010), namely: does a commercial debtor's economic, environmental and social performance in terms of sustainability affect its credit risk rating? has been answered positively, both by research using primary (Zeidan et al, 2015) and secondary data (Eccles et al, 2014). Additionally, frontier research is trying to design improved financial instruments for disaster risk management (Linnerooth-Bayer and Hochrainer-Stigler, 2015). However, there is much we still don't know about how banks incorporate sustainability issues in their risk management models, the impact of those models in the rating of borrowers, the effectiveness of improved lending standards for society as a whole, and how impact investing may help mitigate risks and improve opportunities for borrowers and lenders. The special issue is devoted to understanding how risk management models in the financial sector are embracing sustainability issues, and the impact on financial markets that can, theoretically, bring forward opportunities to more socially responsible companies. Studies can be theoretical in nature, or present empirical evidence of these and related issues, both positive and normative.
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