Sasja Beslik’s Post

“The European Banking Federation says lenders in the region won’t be able to compete with their US rivals if regulators continue to pile on ESG rules that Wall Street remains free to ignore. (…) The ECB is looking for evidence that banks can cope with losses stemming from what it calls “emerging risks,” which include clients’ carbon emissions and rising costs associated with consuming natural resources. The exercise comes after a 2023 review concluded that the vast majority of banks in the region are unprepared. It’s the latest sign that regulators in Europe are moving along a different trajectory than their counterparts in the US. In the EU, banks now face ESG-adjusted capital requirements, more disclosure rules and the possibility of an explicit climate buffer, all of which regulators say will ultimately equip the sector to deal with the risks ahead. In the US, meanwhile, planned rules and guidelines are being walked back against a backdrop of Republican-led opposition to all things ESG.”

The ECB has grown increasingly active in its efforts to get lenders to treat ESG risks — particularly climate change — as financially material. The Frankfurt-based central bank has conducted climate stress tests and even threatened some lenders with fines for failing to take ESG risks seriously. A 2023 study by the ECB found that almost three-quarters of European banks’ corporate loan books are exposed to nature-related risks. And ECB Executive Board Member Frank Eldersonsaid earlier this year that he and his colleagues “will continue insisting that banks actively manage the risks” associated with dealing with climate change. #esg #esgreport #riskmanagement #operationstrategy #eu

The ECB has grown increasingly active in its efforts to get lenders to treat ESG risks — particularly climate change — as financially material. The Frankfurt-based central bank has conducted climate stress tests and even threatened some lenders with fines for failing to take ESG risks seriously. A 2023 study by the ECB found that almost three-quarters of European banks’ corporate loan books are exposed to nature-related risks. And ECB Executive Board Member Frank Eldersonsaid earlier this year that he and his colleagues “will continue insisting that banks actively manage the risks” associated with dealing with climate change. #eu #esg #esgreport #riskmanagement #operationstrategy #businessstrategy

Dear all, together with #Positive Money, we are launching a new study on collateral frameworks and how the European Central Bank can adjust the Eurosystem collateral mechanisms (e.g. eligibility criteria, concentration limits and haircuts) to support two key objectives: risk management, by preventing the accumulation of systemic risks tied to unsustainable assets; and market signalling that encourages the transition away from carbon-intensive and environmentally harmful activities towards those that drive a net zero, nature positive economy. To that end, this report proposes an initial exploratory methodology to go beyond climate and integrate climate and nature risk and impacts into the collateral framework, leveraging publicly available ECB collateral data on French marketable securities issuers and four Carbon4 Finance (C4F) climate and biodiversity databases.  The results highlight the interdependencies between C&E risks and impacts and showcase that an integrated analysis of both climate and broader environmental aspects is crucial. Through its collateral framework, ECB can make a real difference in the transition to a nature positive economy!   Find out more here : https://lnkd.in/dYBRqAb5   #ECB #WWFGFRi #Positivemoney #collateralframework #greenfinance #climatesrisk #natureloss #financialrisk #financialmarkets   Carolin Carella Uuree Batsaikhan Amandine Favier Vicky Van Eyck Jochen Krimphoff Edith Verhoestraete Sebastien Godinot Chiara Pass Maria Fernanda Contreras del Valle Siti Kholifatul Rizkiah Pina Saphira Adam Ng Pierre Monnin Stanislas Jourdan Clarisse Murphy Yannis Dafermos Antoine Pugliese Virginie Wauquiez Nolwen Kazoum-Défossé Melissa Evelyne PEREZ Gilles de Dorlodot Souheila MGAIETH

ESG: Brazil Central Bank’s New Plans Brazil’s Central Bank (BCB) continues to move forward with its #ESG agenda despite the slowdown of the US #SEC on its own standards for #climate #disclosure or the politization of the very term “ESG” in the USA. The BCB has posted for public comment, until June 28, 2024, its proposal to expand the scope of disclosure of climate, environmental, and social risks by the nation’s financial institutions on their Report on Social, Environmental, and Climate Risks (known as the GRSAC Report). The BCB actions come at the same time as the federal government continues development on its #Sustainable #Taxonomy and a similarly themed bill moves through the national Congress.  #ESG is high on the agenda in Brazil.  #sustainability #finance #climatechange #centralbank #banking #sustainablefinance #latinamerica #brazil #melonlatam

"Inside the finance industry, irritation hit a new level after the publication of an ECB paper in January stating that 90% of the euro-zone banks it analyzed are 'misaligned' with the goal of limiting global warming to 1.5C. The central bank called this a 'staggering' outcome. The ECB noted that many banks depend largely on clients in energy-intensive sectors for revenue. It looked at six industries — power, automotive, oil and gas, steel, coal and cement. On average, these exposures amount to 15% of their highest-quality capital, although the ECB cited 'significant variation among banks.' In other words, widespread losses on loans to high-carbon sectors would probably wipe out a large chunk of banks’ financial reserves." "Some of the world’s biggest lenders, including Deutsche Bank AG, HSBC Holdings Plc and Bank of America Corp., are adding caveats to their restrictions on financing coal... Cirebon is one of hundreds of coal-fired plants that power homes and industry across Asia. Unlike in the US or Europe, many coal plants in Asia are still just a few years into an estimated lifespan of roughly four decades. They’re also locked into long-term power agreements and have investors who expect the returns they were promised when they allocated funds to the plants. So shutting them early comes at a significant financial cost. 'Getting to net zero in time won't be possible unless we all work together to find ways to finance the credible early retirement of Asia's relatively young coal power assets, even if it looks like our coal-related emissions go up in the short term,' said Celine Herweijer, HSBC's chief sustainability officer. 'This is about avoided real world emissions.' " "BlackRock Inc. Chief Executive Officer Larry Fink says he has stopped using the term ESG and emphasized the world’s largest asset manager's work with energy firms in a letter to investors this week. The firm has scaled back its participation in international climate investing alliances. In February, a string of financial heavyweights, including JPMorgan Asset Management, Pacific Investment Management Co. and State Street Global Advisors, withdrew from Climate Action 100+, the world’s largest investor group formed to fight global warming. Lenders, including HSBC, decided to withdraw applications to get their climate goals certified by the United Nations-backed Science Based Targets initiative. Other such voluntary climate alliances have been shaken by similar walkouts of late." Alastair Marsh and Natasha White with assistance from Nicholas Comfort, UBS Banker’s Frustration Exposes Cracks in World of Climate Finance—The world’s biggest banks are quietly hanging on to carbon-intensive clients because of what they see as unrealistic demands from regulators and civil society — and the threat to their fees, 𝘉𝘭𝘰𝘰𝘮𝘣𝘦𝘳𝘨, 27 March 2024, https://lnkd.in/gkknMJfa

Geoffroy Marcassoli explores how revitalising the EU's securitisation market can boost sustainable finance. By leveraging securitisation, the EU could attract investment for ESG projects, supporting climate goals and better risk management. Read more here 👉 https://lnkd.in/euaQ3ig5 #SustainableFinance #GreenInvesting #ESG

Confirmation of the inevitable. Well near confirmation. But it was certainly inevitable. With the SEC facing class action over its climate rules from a Motley Crue of US States, the FED was never going to allow the Basel Committee incorporate climate risk into its global requirements. Even if it was a logical conclusion of the TCFD guidance developed by the FSB itself seven years ago. It puts the IFCs in a tricky spot. Merryn Somerset Webb As already reported, in the International Sustainability Institute survey ‘2024 the year sustainable finance goes offshore’ their implementation of global supervisory standards on sustainable finance has been patchy. But buoyed by the establishment of the ISSBs global sustainability standards in 2023, they expressed a commitment across the piste for implementing such supervisory standards but expressing strong concerns for regulatory divergence. This move by the Fed, blocking moves on climate in the Basel Committee, has just made the implementing of rules across the IFCs that bit trickier to navigate. #sustainablefinance #IFCs #regulation

EU climate rules make it difficult for European banks to compete with the US, and more international cooperation would make it easier for global banks to do business, Denisa Avermaete of the European Banking Federation told Green Central Banking. As it stands, many rules around climate change risk are coming from the EU, and international regulators like the Basel Committee are playing catchup. But economists such as Nathan de Arriba-Sellier, director at Rotterdam School of Management, Erasmus University think that the more stringent EU rules are “just basic, good risk management.” Building capital buffers against potential climate change risk is one way to help mitigate against climate systemic risk, said Uuree Batsaikhan, head of research at Positive Money Europe. Meanwhile Rens Van Tilburg, director of the Sustainable Finance Lab at Utrecht University warns that “It could very well be that in a couple of years, we will see that a lot of the American banks are actually getting into some financial problems because they have not taken precautions [and] stepped too much into these high-risk carbon loans and then [the EU] will be very happy that we didn’t go that way.” Read more >> GreenCB.co/3yiYCm7 #ClimateRisk #ESG

Following UNEP FI head Eric Usher (Usher, E.) & WWF International DG Kirsten Schuijt's Global Roundtable discussion unveiling our new joint publication “Navigating Nature-related Regulations for Banks”, we are hosting a webinar on January 16 to discuss the report’s findings on the latest nature-related policy trends across 50 jurisdictions in APAC, Americas, Africa, and EU. Register: https://lnkd.in/e6CW9jAm A sneak peak of the findings: at least 29 jurisdictions—totaling more than EUR 75 trillion of banking assets—are starting to reflect nature-related topics in prudential regulation.    Join us for the webinar for topics including: - Regional trends across supervision, taxonomies and corporate disclosures - Key priorities of central banks and supervisors going forward - Case studies presented by leaders from the Network for Greening the Financial System (NGFS), European Central Bank (ECB), and Bank Negara Malaysia (BNM) Central bank speakers include: Marc Reinke, Co-chair of Taskforce on Nature, NGFS / Head of Sustainable Finance Office, De Nederlandsche Bank Guan Schellekens, Team Lead of the Climate Risk Project Management Office, ECB  Katie Lee Sheah Tsan, Climate Policy Strategist, BNM #GRT2024 #NaturePolicy -- Laura Canas da Costa, Romie Goedicke den Hertog, Elodie Feller, Jessica Smith, Emily R. Dahl, Sem Houben, Maud ABDELLI, Siti Kholifatul Rizkiah, Pina Saphira, Christine J. Wanjiku Mwangi, CFA, Aaron Vermeulen, Elisa VACHERAND, Nicolas P., Elizabeth Aceituno