Financial Institutions ‘Show a Strikingly Low Appreciation of Capacity and Resource Needs’ for Good Climate Risk Management

Banks are likely to have to move quickly to improve their climate risk assessment and mitigation as regulatory expectations rise. The European Central Bank's (ECB) review of European banks’ progress shows how important it is to move quickly as climate risks are no longer distant and have rapidly become material risks in the short- to medium-term (3-5 years).

The ECB released a ‘thematic review’ of over 100 banks of varying sizes with EUR 25 trillion of assets and found significant gaps in climate risk managementBanks have rapidly increased their focus on climate risks, but it takes a concerted, multi-year effort to build the capacity that regulators are increasingly expectingFinancial institutions in other markets that are just beginning to...