Financial Institutions and Their Investors Are Flying Blind into the Climate Transition

The European Central Bank’s supervisory assessment of metrics and disclosures on climate risk at European banks found significant gaps throughout the banking systemBanks have been developing their capacity to analyse climate risk, but have lagged regulatory expectations based on the pace at which climate-related risks are growingOther trade and monetary policy-related issues will help to quickly spread the risks seen in European banks to other parts of the world

The European Union has been among the most active regions in creating disclosure regulations relating to Environmental, Social, and Governance (ESG), green finance and climate risks. However, a new supervisory assessment of European banks by the European Central Bank comes to a blunt conclusion:

“The...