ECB Guide on climate-related and environmental risks for banks
Since 2021, DNB has applied the ECB Guide on climate-related and environmental risks for banks in its prudential supervision of banks. The Guide describes 13 supervisory expectations on how banks should formulate and implement climate-related and environmental risks in their business strategies, governance, risk management and disclosures.
Results of the 2021 study
We asked a total of 22 medium-sized and small banks to complete a self-assessment consisting of a materiality assessment, a survey on meeting supervisory expectations and an action plan. We then analysed and evaluated these self-assessments. The results of our analysis show that all banks could step up their efforts and improve the identification, measurement and management of climate-related and environmental risks. The results are similar to those published by the ECB, who conducted the same study for significant banks in 2021: “The state of climate and environmental risk management in the banking sector”.
Materiality assessment below par
The small group of banks that conducted a materiality assessment consider the materialisation of climate-related and environmental risks through credit risk most likely in the long term (see Figure 1). For most of these banks, however, the materiality assessment cannot be considered sufficiently sound and comprehensive.
