Role of Financial Institutions in Climate Risk Management Through Mindfulness

This chapter introduces a systematic literature review of the financial institutions' role in climate risk management, utilizing PRISMA (Preferred Reporting Items for Systematic Reviews and Meta-Analyses) method for analyzing scholarly publications from 2015 to 2025. The primary aim is to investigate the financial institutions' approaches to dealing with climate-related risks and to point out the prevailing practices, thematic gaps, and institutional trends. The past decade has seen an upsurge in interest in climate finance, yet the literature still remains disjointed and does not provide a complete picture of the various institutional climate risk strategies, especially in the case of geographical and regulatory diversity. To conquer the research void, a conceptual framework resting on Institutional Theory was built. This framework depicts the way that coercive, normative, and mimetic pressures impact the organizational internal filters such as leadership commitment, mindfulness, institutional capacity, and risk orientation, which then determine the climate-related responses like green financing, climate risk disclosures, and adaptive governance structures. Defined inclusion and exclusion criteria were applied to databases like Scopus, Web of Science, and Google Scholar, resulting in the selection of 39 peer-reviewed articles. The outcome revealed that climate risk was dealt with in a more structured way by financial institutions in developed economies, whereas institutions in developing countries were confronted with issues such as weak regulatory mandates, lack of expertise, and poor access to climate data.