ECB will use all means to correct banks’ climate paths
The European Central Bank (ECB) is pulling out all the stops to guide Europe’s banks toward carbon neutrality and rigorously hold them to account on climate risks, according to a speech by Frank Elderson, Vice-Chair of the Bank’s Supervisory Board and Member of the Executive Board. The ECB is offering improved guidance, fostering collaborative initiatives, and incorporating climate-related risks into ongoing supervision and stress testing. Elderson asserts that the ECB will be challenging banks on their self-assessments of the risks they face, stating “Where we see that banks are not managing their exposures to climate-related risks in an adequate manner, we can and will draw on the full supervisory toolkit at our disposal to correct that situation. Just as we do for any other material risk.”
At the same time, the ECB has appointed a head for its new climate change centre. Coming from the International Financial Reporting Standards (IFRS) Foundation, Irene Heemskerk seems likely to maintain a strong focus on reporting and standards. She has also spent time at the Dutch central bank, De Nederlandsche Bank, an early and leading adopter of XBRL. We look forward to seeing how she deploys digital tools in the ECB’s efforts on climate change.