Although major European banks are publishing more data on their exposure to environmental and climate risks, the quality of this information is “still too low” to meet the European Banking Authority (EBA) reporting standards that will apply from the end of June, said the ECB, acting as the single supervisor within the banking union, in a report published on Friday 21 April.
“We acknowledge that banks have been making progress, but further improvements are urgently needed”, said Frank Elderson, Vice-Chair of the ECB’s supervisory board. He gave assurances that the single banking supervisor would take “appropriate supervisory actions” to ensure that banks comply with the technical standards soon to be in force (see EUROPE 12875/18).
In a panel composed of 103 systemic banking groups and 28 medium-sized banks, 86% of the largest banks now report basic data on their material exposures to environmental and climate-related risks. Moreover, nearly all the banks surveyed now state how their boards oversee these risks.
But the quality of the published data is “often insufficient”, according to the ECB. Only 6% of large groups disclose information in all five categories (materiality assessment, business model and strategy, governance, risk management, metrics and targets) of the data that is analysed. And while half of the banks disclose the amount of greenhouse gas emissions they finance, the information is “in the vast majority of cases incomplete, unspecific or not properly substantiated”. As a result, the ECB notes, banks appear to be largely unprepared to apply the European authority's standards.
Nevertheless, the single supervisor notes that European systemic banks are better at reporting on environmental and climate risks than their counterparts in third countries.
See the ECB report: https://aeur.eu/f/6h2 (Original version in French by Mathieu Bion)