Climate change, nature loss and banking supervision
Climate change and nature loss are sources of financial risk
The dual climate and nature crises affect the safety of our banking sector through physical and transition risks. Physical risks include, for example, extreme weather events. Transition risks arise from the changes we make as we shift toward a low-carbon economy.
As the European banking supervisor, we work to ensure that banks identify, manage and disclose risks properly. These include risks stemming from climate change and nature loss. Doing so helps banks become more resilient. It therefore contributes to the safety of the euro area banking sector and the financial system as a whole.
Guide on climate-related and environmental risks
How exactly do we expect banks to manage and disclose climate-related financial risks? We offer a detailed explanation in our supervisory guide.
Read the press releaseOne of our supervisory priorities
Our supervisory priorities identify climate and environmental risks as a key vulnerability for banks. The priorities describe how we will address this issue in our role as supervisor.
Discover our supervisory priorities for 2025-27LOOKING FOR THE LATEST ON CLIMATE CHANGE?
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Are banks sufficiently prepared?
The transition to a decarbonised economy has an impact on banks’ credit portfolios. For instance, companies that aren’t taking steps to adapt their activities may become less competitive in the future. When financing these companies, banks have to account for heightened credit risk.
Learn more about banks’ exposure to transition risksBanks need to act
Banks must step up their efforts in measuring and managing climate and environmental risks. We have set deadlines for banks to do so, based on our supervisory expectations.
Read the press releaseResults of the 2022 climate risk stress test
Our first ever climate risk stress test revealed that banks have made some progress. Still they are lagging behind in several areas.
See the press releaseGood practices for banks
We collected good practices on climate and environmental risk management from 25 banks under our supervision. Sharing these helps other banks align with our supervisory expectations.
Explore the good practicesClimate change and the ECB
As a central bank and supervisor, climate change has a significant impact on all of our responsibilities. That’s why we’re taking action on all fronts to play our part in tackling this global challenge.
The ECB’s other actions on climate change