HASduring than a working document published on August 6 by the European Central Bank (ECB) notes that between September 2018 and December 2022, banking institutions in the eurozone charged more to “brown” companies than to those deemed “green”, the ECB threatens to impose fines on banks that do not identify ” correctly “ their climate risks, as Frank Elderson, one of the six members of the ECB's executive board, said in an interview with ” World “ from July 25.
Why this apparent contradiction? Because bankers prefer to manage risks ex ante by modulating margins, rather than ex post by increasing capital. Conversely, because it wants to be content with identifying risks, the ECB gives the impression of preferring to compensate for them rather than avoid them. When the heart is not in it, the head makes mistakes and the body does not follow. The heart is not in it because, each time they point out that climate change is extremely worrying for financial stability, the managers of the Frankfurt bank are quick to assert that their mandate is to ensure that banks are safe and sound and not to develop policies relating to climate and nature.
“It's the politicians' business, who are elected, while we are not”says Frank Elderson in the same interview. One would think one was hearing Jens Weidmann, the former president of the Bundesbank, when he declared on November 19, 2020 in the Financial Times that central banks could demand better information on climate risks, but they could not compensate for the lack of political will: ” Central banks cannot compensate for lack of political will (…). When it comes to saving the planet, they don't have a magic wand.”
A process in progress but without obligation
Today, too many public actors consider that the fight against climate change is not their responsibility, since, unlike politicians, they do not have the power to change society. Each one passes the buck: the supervisory authorities consider that it is above all necessary to change the behavior of the establishments under their control, the banks consider that it is necessary first to modify that of their customers, and the politicians, assuming that these matters are too complex, rely on the expertise of the regulators.
As a result, the ECB's threats do not seem to impress European banking institutions. Having noted in 2021 that only 10% of them were correctly assessing their climate risks, the ECB thus postponed the deadline for their compliance to 2022. At that date, as the observation was essentially the same, the deadline for compliance was set at March 2023.
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Source: Lemonde
