![]() ![]() ![]() ![]() In a recent study of 29 banks, the EBA found that 58% of their total exposure to big companies was in sectors that could be sensitive to transition risks. Some banks fail to disclose risks beyond their most carbon-intensive clients. “Transparency encourages banks to look better, be more capitalized, have better liquidity and hopefully also eventually re-orienting capital flows to sustainable investments,” said Pilar Gutierrez, an official at the European Banking Authority, a regulator that’s working on a common standard for comparing banks’ green assets. Investors may want to be wary of banks that appear at first glance to have limited exposure to climate risks. Banks that don’t disclose a lot of details could be perceived as less exposed to risks from climate change or so-called transition risks, such as regulatory or policy changes that jeopardize profits at carbon-intensive corporate clients. While they’re giving hard numbers on the money loaned to companies that will be challenged as the world tries to reduce CO 2 output and avoid climate disaster, the disclosures provide a limited view into only a portion of their business.įor example, there is no one set of disclosure standards that banks are obliged to follow and they differ on how to measure key information and what they should release publicly. As a result, investors, regulators and the public would face difficulty in determining which lenders face the highest risks and are taking the most determined action. Now, investors and regulators want them to prove it.įor the first time, many banks are publishing relevant data this year on criteria such as lending to fossil fuel industries, as Europe’s central banks scrutinize their loan books and threaten higher capital requirements for those with excessive climate risks.īloomberg News analyzed annual reports and similar filings from a selection of Europe’s major banks. European banks spent almost a decade claiming they’re part of the fight against climate change. ![]()
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