ECB sets deadlines until 2024 for banks to deal with climate risks

The European Central Bank (ECB) published, this Wednesday (2), the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks. Even though 85% of banks have already implemented at least basic practices in most areas, they still lack more sophisticated methodologies and information on climate and environmental risks, the document concluded.

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Isabella Caminoto

November 2, 2022 14:49 PM

The ECB has set staggered deadlines, until the end of 2024, for banks to progressively meet all supervisory expectations set out in its Guide on Climate and Environmental Risks in 2020. The deadlines will be closely monitored and, if necessary, supervisory measures will be taken, says the agency.

🧵Our thematic review shows that banks are still far from adequately managing climate-related and environmental risks. We expect them to meet all our supervisory expectations by the end of 2024.

Press releasehttps://t.co/zqXWlJyEqc
Full results https://t.co/kJKbMelfBB

1/3 pic.twitter.com/E1GkkvnD5R
— European Central Bank (@ecb) November 2, 2022

There is also a concern related to the execution capacity of most banks, where the effective implementation of their practices is still delayed. As a result, they continue to significantly underestimate the breadth and magnitude of such risks, and almost all banks (96%) have blind spots in identifying them, the review found.

For the ECB, good practices across the banking sector show that rapid progress in managing climate and environmental risks is possible.

The thematic analysis of bank strategies and governance and risk management frameworks covers 107 banks under the direct supervision of the ECB and 79 banks supervised by their respective national authorities.

(To AFP)

This post was last modified on November 2, 2022 16:32 pm

Isabella Caminoto

Lawyer and master's student in International Law, I have democracy and freedom as undeniable flags. I am passionate about animals and believe that the well-being of our planet should be the daily highlight of our society's agenda.