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Eurozone banks are making progress in countering climate-related risks, but more needs to be done, and the European Central Bank is ready to force lenders to act if necessary, Claudia Buch, the new president of the Supervisory Board of the European Union, announced yesterday. ECB, reports Reuters, according to Agerpres.
"Almost all banks see climate and environmental risks as material financial risks and are adjusting their risk management system step by step," the ECB official explained, noting: "But, much more work awaits us. If the banks do not meet the requirements of the supervisory authorities, we can take measures, for example by requiring better risk management or a higher level of capital".
Officials want the banks to remedy the deficiencies identified by the ECB regarding climate risks by the end of 2024.
European regulators are putting pressure on banks to manage their businesses by taking into account climate change risks, from floods and droughts to the transition to new energy sources.
The European Central Bank has established a center of expertise dedicated to climate change, which will advise the ECB on how to incorporate environmental aspects into monetary policy and banking supervision. Around 12 people work in the new centre, which will collaborate with existing teams within the ECB.
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