Addressed to both banks and supervisors, these principles seek to improve, on the one hand, banks’ risk management and, on the other, the supervisory practices linked to climate-related financial risks.
Furthermore, the revisions to the Capital Requirements Directive currently under discussion by the EU co-legislators further reaffirm the ECB’s mandate in this area by broadening the supervisory toolkit to address environmental, social and governance risks, and by explicitly requiring banks to have concrete plans to address C&E risks arising from misalignment with EU climate targets.