EUROPE: ECB Launches Public Consultation on Climate-Related and Environmental risks

Thursday May 21 2020

On 20^th May 2020, the European Central Bank (ECB) published a guide for consultation that explains how it expects banks to safely and prudently manage climate-related and environmental risks and disclose such risks transparently under the current prudential framework. The ECB wants banks to account for these risks given that they drive existing prudential risk categories and can substantially impact the real economy and banks.

The guide specifies how ECB Banking Supervision expects banks to consider climate-related and environmental risks in their governance and risk management frameworks and when formulating and implementing their business strategy. It also outlines how the ECB expects banks to become more transparent by enhancing their climate-related and environmental disclosures.

The guide aims to raise industry awareness of climate-related and environmental risks and to improve the management of such risks. It is also intended that the guide will serve as a basis for the supervisory dialogue. Banks are expected to assess whether their current practices are safe and prudent in the light of the expectations and, if necessary, to start adapting them.

The consultation on the guide starts today and ends at midnight CET on 25 September 2020.

Click on the link for further information.