The European Central Bank (ECB) has highlighted their concerns on banks’ lack of progress on developing their management of Climate and Environmental (CE) Risks. Ian Nelson, Head of Banking, takes a look at the practical steps banks and financial institutions can take to move from talk to action.
The results of the ECB thematic review highlighted the lack of effectiveness of implementation strategies of European institutions. Consequently, the ECB has set a deadline of the end of 2024 for banks to comply with supervisory expectations on CE risks.
Banks must immediately focus on implementing their action plans for climate risk management, ensuring strong cultural embedding within their business model, risk management framework and governance structure.
Overview
In November 2022, the ECB published the results of their thematic review on CE risks.
- The thematic review comprised of a deep dive into Institution’s strategies, governance and risk management frameworks relating to CE risks.
- The report was accompanied by summary comments and recommendations on observed good practices to assist banks on how they can move closer to compliance.
- While the review acknowledged that many institutions have made progress on their implementation plans, most banks remain well short of fully reaching supervisory expectations.
- The ECB has now set out a clear directive that institutions must be fully compliant with supervisory expectations by the end of 2024. It has also set out the minimum milestone expectations along the compliance journey.
Get in touch
If you have any queries on the ECB's recommendations, as outlined in our report above, please contact a member of our banking team below. We'd be delighted to hear from you.
Contact our team
Ian Nelson
Partner, Head of Financial Services & Regulatory
KPMG in Ireland
Adrian Toner
Managing Director
KPMG in Ireland
Sarah Moran
Director, ESG Advisory Lead
KPMG in Ireland
Dr. Barry O'Dwyer
Director, KPMG Sustainable Futures
KPMG in Ireland
