Facing the Coming Storm:The ECB’s Supervision of Climate & Environmental Risks

Abstract

With climate change running unabated, the most remarkable development of the Banking Union over the past ten years certainly relates to the pioneering role of the European Central Bank in the supervision of climate-related and environmental financial risks that banks are facing. As soon as 2020, the ECB issued a comprehensive guide for the supervision of such risks and has since carefully monitored the financial institutions’ compliance with its supervisory expectations, even waiving on occasion the threat of administrative sanctions. While there is now an international consensus among supervisory authorities for the supervision of climate risks, the ECB continues to lead by example, and has in the process opened new avenues for the legal rethinking of its broader constitutional obligations