After several years of warnings, the European Central Bank (ECB) is eventually taking the next step and is imposing fines to 4 banks for not meeting the deadlines for assessing their exposure to climate risks.
For the first time ever, the European Central Bank (ECB) is daring to impose fines on several lenders for their long-standing failure to consider, calculate and disclose their own company's impact on climate change and climate risks (including all managed assets).
Four lenders are now facing sanctions after failing to meet the deadlines set by the ECB to assess their climate risks. However the total amounts are not yet final. There is speculation as to whether these will be more “symbolic” in order to communicate an even clearer warning from the ECB. What is clear, however, is that the four banks will now have to pay daily fines for as long as the deficiencies persist. Nontheless, if the climate-damaging effects are reduced, the fines may be lowered or even lifted.
According to Bloomberg, with an annual revenue of €10 billion and a daily penalty percentage of 5%, the daily fines can amount to €1.4 million a day!
The imposition of fines is nevertheless an unusually harsh step to force banks to comply with the ECB's views on dealing with climate risks. According to the former head of banking supervision, Andrea Enria, the ECB would use such sanctions as an alternative to higher capital requirements.
Source: Bloomberg
