This thesis investigates the interplay between responsible practices, corporate governance, and environmental credit risk. It employ a novel environmental relevance score by Fitch Ratings and assesses its implications for banks financial performance. Whilst determining the potential impact of board gender diversity on levels of environmental risk exposure. The environmental relevance score share a structurally similar to the used environmental score, but priorities the assessment of risk from a creditor perspective. Chapter 2 provides a PRISMA systematic literature review, that underscores the urgency of integrating environmental considerations into financial decision making. Both empirical chapters use a sample of 345 listed banks from 75 countries during the period of 2018-2022. Chapter 3 examines the impact of environmental credit risk on banks financial performance, which was proxied by accounting and market indicators, The empirical outcomes strongly indicates that banks’ that are exposed to high environmental credit risk tend to exhibit lower financial performance. The outcomes passes multiple robustness checks. Additionally, the moderating role of the country-level climate risk is explored, finding that the interaction between climate risk and environmental credit risk mitigate the negative impact on banks’ financial performance. Chapter 4 investigates the effect of board gender diversity on environmental credit risk. The findings indicates that boards with higher female representation tend to demonstrate lower levels of environmental credit risk exposure. The effect of critical mass was also underscored, determining that the risk-mitigating influence of gender diversity is statistically significant exclusively for boards consisting of at least three females. These results remain robust across alternative model specifications. This study highlights the need for banks, investors, and policymakers to consider environmental risk and governance structure when assessing performance and making investments decisions.