Frankfurt, Nov 22 (UNI/Sputnik): Financial institutions in the eurozone must make efforts and adjust their practices to manage climate and environmental risks, the European Central Bank (ECB) said in a statement on Monday.
“The ECB expects all institutions to take decisive action to address the shortcomings set out in a dedicated supervisory feedback letter… The ECB expects institutions to adopt a strategic approach and to take intermediate steps as appropriate,” the ECB said in a statement that accompanies a report that examines impact of climate on business strategy in the eurozone.
Titled Guide on climate-related and environmental risks, the report is the ECB’s first extensive supervisory assessment covering climate change-related risk adjustments of 112 supervised institutions with combined assets of €24 trillion.
According to the report, many institutions have made efforts to adjust climate and management risks and provided strategic plans on the implementation of adjustments.
Nevertheless, the report notes that none of the observed institutions are even close to adjusting their practices as the ECB expected with more than half of institutions lacking any specific action plans to embed climate and environmental risks in their business strategies.
Moreover, the report says few institutions prepared necessary and relevant risk reports for their management bodies to start implementing adjustments while many institutions take only formal responsibility for climate and environmental risks.
“All in all, institutions have started paving the way, but the pace of progress remains slow in most cases… many institutions will not have practices in place that are aligned with the ECB supervisory expectations in the near future,” the report read.
In the guide, the ECB provided 13 supervisory expectations on climate and environment risks assessment and management for institutions to follow in order to minimize climate-related risks that are likely to affect the eurozone. While these expectations are not binding for institutions, the ECB report notes that these are to provide a sustainable dialogue on risks management.
