• About
  • Privacy Policy
  • Terms
  • Contact
Friday, January 27, 2023
Financial Eye News
  • Home
  • Markets
    • Stock Market News
    • Commodities
    • Forex
    • Renewables
  • Cryptocurrency
    • Ultimate Guide to Crypto
  • Business
    • News
    • Companies
    • Technology
    • Climate
    • Politics
  • Reports
    • Ultimate Guide to Crypto
  • VideosNew
No Result
View All Result
  • Home
  • Markets
    • Stock Market News
    • Commodities
    • Forex
    • Renewables
  • Cryptocurrency
    • Ultimate Guide to Crypto
  • Business
    • News
    • Companies
    • Technology
    • Climate
    • Politics
  • Reports
    • Ultimate Guide to Crypto
  • VideosNew
No Result
View All Result
Financial Eye News
No Result
View All Result

ECB accuses eurozone banks of ‘white noise’ on climate risks

March 19, 2022
in Climate
Reading Time: 3 mins read
50 1
ADVERTISEMENT

The European Central Bank has threatened to name and shame banks after finding that none of the 109 lenders it oversees meet its climate risk disclosure expectations but produce “a lot of white noise and no real substance”.

Like most major central banks, the ECB is stepping up its efforts to address growing public concern about climate change, which its president Christine Lagarde has called “the biggest challenge that is addressed to us”.

However, it is starting to lose its patience with eurozone banks after finding “significant gaps” in their disclosure of environmental risks, which threatens to undermine its debut stress test later this year to assess the impact of climate change on the banking system.

Banks will be required to publish more detail on their exposure to climate risks from early next year when new rules from the European Banking Authority take effect.

The ECB called on banks to “take decisive action” after finding that none met its supervisory expectations for disclosures and only 15 per cent published data on the emissions of the companies they finance, known as scope 3.

Three-quarters of banks did not disclose whether climate and environmental factors had a “material impact on their risk profile”, it said, even though half of the banks have told the ECB they are exposed to such risks.

“There is very little justification for this lack of substantial progress,” said Frank Elderson, an ECB executive board member. “We stand ready to use the full array of supervisory tools at our disposal to ensure banks’ climate and environmental disclosures are up to our standards and ultimately that eligible banks are prepared for the new regulatory requirements.”

ADVERTISEMENT

He added that any bank failing to disclose its exposure to climate risks could be in breach of EU law and the ECB had “the option to publicly list those banks which repeatedly fail to disclose their climate and environmental risks”.

While there had been some progress in banks’ climate disclosures — with 70 per cent now making disclosures versus only half of them two years ago — the ECB said six out of 10 banks “do not describe how transition risk or physical risk could affect their strategy”.

“Banks are trying to compensate for the poor quality of their disclosures by issuing a great volume of information around green topics,” said Elderson, adding that investors and supervisors were left with “a lot of white noise and no real substance”.

Under the ECB’s stress test this year, banks must model the impact of several short-term scenarios, including a steep increase in carbon prices, a heatwave and heavy flooding.

They must also assess how they would fare under long-term scenarios, including one called the “hothouse scenario” in the event that no action is taken to cut carbon emissions and temperatures rise by 3C by 2080, leading to “severe physical risks and extreme costs” from more catastrophic weather events such as floods and fires.

Temperatures have already risen by at least 1.1C since the pre-industrial era.

The exercise will have no pass or fail marks and the results will not directly feed into banks’ capital requirements. But the ECB said on Monday that it was “gradually integrating climate and environmental risks into its regular supervisory methodology”, which will ultimately feed into capital requirements.

The European Banking Federation said its members would “continue to improve disclosures” and called on legislators to push the companies they finance to make better disclosures. “The availability and quality of data from companies that banks rely on to publish more detailed information continue to remain a challenge,” it said.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here

Source: Financial Times

Share6Tweet4Share1SendShareSend

Related Posts

Climate

What to expect from this month’s nature COP

December 5, 2022
Climate

War and adverse weather set to keep food prices high

December 5, 2022
Climate

French hail ‘breakthrough’ in EU dispute with US over climate law

December 2, 2022
Climate

US says Chinese solar companies have been evading tariffs

December 2, 2022
Climate

Florida to pull $2bn from BlackRock in spreading ESG backlash

December 1, 2022
Climate

EU unveils plan to slash waste by nearly a fifth by 2030

November 30, 2022

Popular Stories

  • AIG to launch cut-price IPO of life and asset management unit

    48 shares
    Share 19 Tweet 12
  • EY boss targets $10bn boost from Silicon Valley tie-ups after break-up

    32 shares
    Share 13 Tweet 8
  • Tesla delays plan to restore Shanghai output to pre-lockdown levels -memo

    32 shares
    Share 13 Tweet 8
  • TV production giant Banijay to go public via Arnault-backed Spac

    30 shares
    Share 12 Tweet 8
  • Nio to Invest $32.8M Building R&D Labs in Shanghai By Financial Eye

    30 shares
    Share 12 Tweet 8
ADVERTISEMENT

Latest News

Taylor Swift Fans Sue Ticketmaster’s Parent Company

December 5, 2022

Fisker trades down following price cut at Citi By Financial Eye

December 5, 2022

UAW president faces run-off election as reformers make gains

December 5, 2022

Felipe Valls, 89, Whose Cuban Restaurant Became a Political Hub, Dies

December 5, 2022

Longroad buys 98-MW solar farm in California

December 5, 2022
Facebook Twitter LinkedIn

Financial Eye is one of the most trusted news sources for Financial News, global news and local USA news, we provide the news from the most trusted sources.

LEARN MORE »

Recent News

  • Taylor Swift Fans Sue Ticketmaster’s Parent Company
  • Fisker trades down following price cut at Citi By Financial Eye
  • UAW president faces run-off election as reformers make gains

Sections

  • Business
  • Climate
  • Commodities
  • Companies
  • Cryptocurrency
  • Cryptocurrency
  • Forex
  • Green Energy
  • Latest Financial News
  • News
  • Politics
  • Stock Market News
  • Technology
  • Videos

© 2022 Financial Eye News Media

No Result
View All Result
  • Home
  • Markets
    • Stock Market News
    • Commodities
    • Forex
    • Renewables
  • Cryptocurrency
    • Ultimate Guide to Crypto
  • Business
    • News
    • Companies
    • Technology
    • Climate
    • Politics
  • Reports
    • Ultimate Guide to Crypto
  • Videos

© 2022 Financial Eye News Media

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Subscribe To Our Daily News Round-Up.

The top ten most-read stories direct to your inbox

You have Successfully Subscribed!

You have Successfully Subscribed!

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.