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It has been reported that the European Central Bank will be imposing fines on as many as four lenders due to “not meeting deadlines set by the ECB for assessing their exposure to climate risks.” Specifically, ECB regulations require “banks to assess whether they are–or will be–exposed to material risks, and that they reflect that in their capital reserves” and “[t]he ECB has . . . [included] climate and environmental-related risk” in this assessment. The banks subject to these fines have not yet complied with these requirements.
However, it appears that the ECB–despite the planned imposition of these fines–is adopting a relatively gentle approach to enforcement. The ECB stated that it had originally threatened eighteen banks with penalties–but only four are now facing a penalty. This suggests that the vast majority of the banks that the ECB engaged with–more than 75%–adapted their behavior in response to ECB pressure and avoided penalties. Further, until the size of the penalties are announced, it is not clear whether the penalties will be assessed at a significant amount to promote deterrence or will instead be more symbolic than punitive.
Regardless, the fact that a regulator is now imposing fines on banks for a failure to take climate risks into account is highly significant. Still, this is a European regulator rather than an American one–and the European Union and associated institutions have been adopting more stringent approaches to climate change than their counterparts in the United States. Indeed, this planned penalty only reinforces that regulatory divergence.
The European Central Bank is set to take the unprecedented step of imposing fines on several lenders for their protracted failure to address the impact of climate change. As many as four lenders face penalties after not meeting deadlines set by the ECB for assessing their exposure to climate risks, according to people familiar with the matter. The amounts aren’t final yet and may be largely symbolic, the people said, who asked not to be named as the move isn’t public.
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It has been reported that the European Central Bank will be imposing fines on as many as four lenders due to “not meeting deadlines set by the ECB for assessing their exposure to climate risks.” Specifically, ECB regulations require “banks to assess whether they are–or will be–exposed to material risks, and that they reflect that in their capital reserves” and “[t]he ECB has . . . [included] climate and environmental-related risk” in this assessment. The banks subject to these fines have not yet complied with these requirements.
However, it appears that the ECB–despite the planned imposition of these fines–is adopting a relatively gentle approach to enforcement. The ECB stated that it had originally threatened eighteen banks with penalties–but only four are now facing a penalty. This suggests that the vast majority of the banks that the ECB engaged with–more than 75%–adapted their behavior in response to ECB pressure and avoided penalties. Further, until the size of the penalties are announced, it is not clear whether the penalties will be assessed at a significant amount to promote deterrence or will instead be more symbolic than punitive.
Regardless, the fact that a regulator is now imposing fines on banks for a failure to take climate risks into account is highly significant. Still, this is a European regulator rather than an American one–and the European Union and associated institutions have been adopting more stringent approaches to climate change than their counterparts in the United States. Indeed, this planned penalty only reinforces that regulatory divergence.
The European Central Bank is set to take the unprecedented step of imposing fines on several lenders for their protracted failure to address the impact of climate change. As many as four lenders face penalties after not meeting deadlines set by the ECB for assessing their exposure to climate risks, according to people familiar with the matter. The amounts aren’t final yet and may be largely symbolic, the people said, who asked not to be named as the move isn’t public.
Sign Up for e-NewsBulletins
You are responsible for reading, understanding and agreeing to the National Law Review’s (NLR’s) and the National Law Forum LLC’s Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.
Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com intended to be a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional. NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us.
Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.
The National Law Review – National Law Forum LLC 2020 Green Bay Rd., Suite 178, Highland Park, IL 60035 Telephone (708) 357-3317 or toll free (877) 357-3317. If you would ike to contact us via email please click here.
Copyright ©2024 National Law Forum, LLC
Related
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- ECB to Impose First-Ever Fines on Banks for Climate Failures – Bloomberg
- European Parliament Adopts Corporate Sustainability Due Diligence Directive – The National Law Review
- Harvard Law School receives $15 million to launch Emmett Environmental Law Center – Harvard Law School | Harvard … – Harvard Law School
- Climate change a matter for politicians, not central banks: SNB – Reuters
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