Banks are still not delivering enough information on the climate risks they face, the European Central Bank (ECB) says in a new assessment it concluded on Friday, as it prepares to tighten its requirements.
Although over the past year banks have increased the amount of information they publish, the quality of this information is still too low to meet future supervisory standards, the ECB warned in a statement.
The ECB has carried out this assessment of European banks' progress for the third year in a row. In 2020, it published a catalogue of recommendations for banks to take climate-related risks into account. In the face of slow progress since then, it has set specific deadlines for each institution to meet these expectations by the end of 2024.
Among these requirements, companies need to fully assess the exposure to climate and environmental risks of their activities. However, only 6% of banks are disclosing sufficient information in all five categories of the assessment.
For example, although half of banks now provide information on the amount of carbon emissions they finance, this information is "incomplete" in the majority of cases, the ECB noted.
Supervisors have asked banks to address these shortcomings and "inform the strategy with which they are preparing to comply with the future standards" of the European banking authority.
"Stricter disclosure rules are taking effect this year. If necessary, we will take appropriate supervisory actions to ensure that banks comply," says Frank Elderson, vice-chairman of the ECB's supervisory board.
Last year, he threatened to publish a list of banks that continued to fail to disclose their climate risks.
