Abstract The effects of climate change and related risks on the economies and financial systems are attracting the governments and financial sector regulators’ attention globally. Climate change is associated with physical degradation and economic losses which influence the financial system stability. This study investigates the causal relationship between climatic variables and green banking development in Brazil, Russia, India, China and South Africa, with secondary data from 1990 to 2018, employing unit root test, co-integration tests with the FMOLS, DOLS and Granger causality for long run relationship analysis. The results illustrate that carbon dioxide emission and renewable energy significantly and positively affect green banking development in both dynamic and fully modified ordinary least squares estimations methods. Government effectiveness significantly and positively affects green banking development. Also, causality flows from bank credit to carbon dioxide, renewable energy and government effectiveness. BRICS countries’ banks should focus on promoting green banking practices by establishing regulatory systems which motivates banks to fully embrace green banking activities. Specifically, banks should moderate charges in financing green projects and exploit the green investments opportunities by designing green products and services. Monetary authorities should treat climate change culture as an attribute of financial operations, which necessitates that certain proportions of bank credit are allocated to green financing in soft loan format. The study reveals a long run relationship between the climate change variables and green banking development.