According to a study by the South African Reserve Bank, South African banks have become more cautious in lending as climate shocks raise the risk of defaults. 

From 2009 to 2024, credit growth at 38 banks slowed after floods, droughts, and the introduction of the carbon tax in 2019.

The report noted that extreme weather events increased default risks and reduced collateral values, while the carbon tax also pressured company profits. 

The findings align with the global trends seen in Europe, the US, and Brazil. Tighter credit comes as companies need funds to adapt and move toward a low-carbon economy. The authors warned that this could delay the transition and jeopardize firms' ability to cope with future climate risks.