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A report worth reading from Bloomberg. Banks are coming under increased pressure ahead of the 2022 deadline undertake ESG stress tests. The ECB has concerns that European banks are not ready to comply with the ESG regime. With a recent survey of 20 of Europe’s top banks highlighting it is unlikely they will be ready. Banks will have to demonstrate that they have assessed and understand the Environmental, Social and Governance risks associated with their investments. As ESG aims to steer capital away from polluters, the ECB has made clear its unhappy with the industrys progress to date.
‘President Christine Lagarde said in July that a ¢â‚¬Å“substantial majority¢â‚¬Â of the banks overseen by the ECBs supervisory unit ¢â‚¬Å“are not meeting¢â‚¬Â expectations. And according to an ECB survey, banks themselves have admitted that 90% of their climate reporting either doesnt meet, or only partially meets the supervisors expectations.’
It could turn into an expensive exercise for banks if the European regulator decides to add regulatory capital based upon climate risk. The increasingly robust nature of the regulatory regime operated over banks it is likely that regulatory capital will be used as compliance tool.
‘The Bank for International Settlements said in July that regulators are likely to acknowledge that the first round of climate stress tests — due to their ¢â‚¬Å“preliminary nature¢â‚¬Â — wont be enough to justify an immediate increase in capital requirements. But banks should expect a regulatory review of their business models and daily risk management through the lens of climate change.’
Now lets put the cyber hat on, the SEC has ‘Cybersecurity Risk Governance’ on its 2021 calendar. Following a similar process to climate risk, cybersecurity risk may become another ESG issue for banks in the not to distant future.
#theaugustagroup‚Â #theaugustaplan‚Â #cybersecurity‚Â #supplychainriskmanagement‚Â #cyberriskmanagement‚Â #compliance‚Â #cyberinsurance‚Â #insurance‚Â #regulatorycompliance‚Â #regulatoryoversight‚Â #esg #esgrisk‚Â #cyberregulation‚Â #esgreporting‚Â #soc2‚Â #defenceindustry‚Â #esgstrategy
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