Climate change: the ECB has launched a public consultation on its Guide on climate-related and environmental risks

Following the adoption of the Paris Agreement on climate change and the UN 2030 Agenda for Sustainable Development in 2015, governments are making strides to transition to low-carbon and more circular economies on a global scale. On May 20, 2020, the European Central Bank ("ECB") has launched a public consultation on its Guide on climate-related and environmental risks. 

The ECB has identified climate-related risks as a key risk driver on the SSM Risk Map for the euro area banking system, being of the view that institutions should take a forward-looking and comprehensive approach to considering climate-related and environmental risks.

The published guide outlines the ECB’s understanding of the safe and prudent management of climate-related and environmental risks under the current prudential framework, describing the ECB's expectations on climate-related and environmental risks from institutions, when formulating and implementing their business strategy and governance and risk management frameworks. In addition, it further explains how the ECB expects institutions to become more transparent by enhancing their climate-related and environmental disclosures.