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EU watchdog tells banks to have a 10-year climate plan
(EurActiv, 23 Jun 2021) Banks in the European Union must have a 10-year plan spelling out how they will deal with environmental, social and governance (ESG) risks to their bottom line, the bloc’s banking watchdog said on Wednesday (23 June).
Increasing volumes of money are going into climate-friendly investments and regulators want investors to have a reliable snapshot of a company’s green credentials.
The report from the European Banking Authority (EBA) set out recommendations for banks and their supervisors for approaching ESG risks and to help the EU meet its goals of cutting carbon emissions by 2050.
Banks should plan strategically over a period of at least 10 years to show their resilience to different scenarios, disclose strategic ESG objectives, and assess the need to develop sustainable products, EBA said.
Climate risks can include “physical” or weather-related events like floods, and “transition” risks from sudden changes in asset values.
The EBA report looks at the second pillar of core banking rules that assess how risks at a lender are managed.
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EurActiv, 23 Jun 2021: EU watchdog tells banks to have a 10-year climate plan
