Banks in the eurozone are making overall progress in addressing climate-related risks. However, some may face monetary fines.
Certain eurozone banks have not met the targets set by the European Central Bank (ECB) for combating climate change, which could result in fines, according to a report by Reuters cited by TASR.
“We have informed several banks that based on our current assessment, they have not met the interim targets, which means they may face monetary fines,” an ECB banking supervision spokesperson told the Spanish newspaper Cinco Días on Wednesday. The affected banks have the right to respond before any fines are enforced. On Tuesday, June 4th, ECB Supervisory Chief Claudia Buch stated that eurozone banks are generally making progress in addressing climate-related risks. Almost all banks in the eurozone consider climate and environmental risks significant and are gradually adjusting their risk management tools, although much work remains to be done, Buch said. The ECB is prepared to compel banks to act if necessary.
“If they do not meet our supervisory expectations, we can take appropriate measures, such as requiring better risk management or increasing capital,” Buch explained.
In 2020, the ECB’s banking supervision issued guidelines for financial institutions in the monetary union regarding climate and environmental risks, outlining its expectations from the banks. Sources of risk, according to the regulator, include investments in high-emission companies and sectors that harm the climate.
This is because the market prices of these investments can rapidly change due to political shifts, severe climate events, and changing investor attitudes.
