In an interview, a senior European Central Bank (ECB) supervisor said some euro banks have failed to meet the ECB’s climate-related goals and may face fines.
The ECB has handed banks a list of deadlines for factoring in risks relating to climate change, from floods and droughts to a transition to new energy sources, into the way they do business, Reuters reported.
Kerstin af Jochnick, an ECB Supervisory Board member, told the Spanish newspaper Cinco Dias that despite the deadlines, some banks still need to catch up.
He added, “We have notified a few banks that, based on our current assessment, they have not met the interim milestones, which means they face the prospect of having to pay a so-called pecuniary penalty.”
The ECB has the authority to fine banks up to 5% of their daily turnover until the issue is resolved or for a maximum of six months. Before any fine, referred to as a “periodic penalty payment” in ECB terminology, is imposed, banks have the right to be heard.
Read more: European Central Bank to impose fines on climate failures in its first-ever move
Reuters reported that Claudia Buch, the top supervisor at the ECB, stated that “almost all banks” have recognized significant financial risks associated with climate change and are gradually enhancing their risk management practices.
The ECB, which oversees large banks in the eurozone and sets monetary policy for the region, is widely anticipated to begin reducing interest rates soon.
