ECB calls on banks to urgently alter activity to protect climate

ECB calls on banks to urgently alter activity to protect climate
Credit: Belga

The European Central Bank (ECB) has called on large banks to “urgently” adapt their business activity to reduce their environmental impact after falling behind in this area.

Frank Elderson, an executive board member of the ECB and chair of the Network for Greening the Financial System, believes that “banks must urgently set ambitious and concrete objectives to reduce their exposure to present and future environmental risks,” Belga News Agency reports.

Many banks still play a central role in fossil fuel investment, perpetuating pollution and preventing the green transition. “Most banks do not currently have concrete action plans to shift their commercial strategies” away from these risks, Elderson lamented.

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This latest appeal to banks comes after the ECB already called on 112 large banks in the eurozone to carry out self-assessments of how ecological their activities are. Half of these establishments – that together account for €24 billion in financial activity – plan to divest from certain sectors such as mines or fossil fuels.

However, “only a handful plan to actively shift their portfolios to areas compatible with the Paris Agreement,” Elderson claims. To this end, the ECB welcomes the European Commission’s proposal to require banks to implement transitions to activities that do not directly harm the environment.

Between March and July 2022, the ECB will assess the resistance of large banks to changing their practices and evaluate their exposure to environmentally harmful activity.

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