SGGP 11/16/2023 10:32

The European Central Bank (ECB) has just warned that it will impose financial sanctions on banks that are slow to calculate risks and make decisions related to climate change in their operations.

The headquarters of the European Central Bank (ECB) in Frankfurt am Main, western Germany. Photo: AFP/TTXVN

The ECB’s Vice President of the Supervisory Board, Frank Elderson, has set a new deadline of 2024 for banks to “remediate deficiencies” and face fines if they fail to improve the quality of their climate and environmental (C&E) risk management. According to Bloomberg, financial penalties could be as high as 5% of a bank’s daily revenue.

The ECB’s warning comes two weeks ahead of the 28th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28). The ECB says banks need to engage with their customers to gain a deeper understanding of how they are being affected by the climate crisis, and how they will mitigate and adapt to the consequences.