The European Banking Authority (EBA) has confirmed it will develop a climate stress test and further explore the possibility of offering banks favourable prudential treatment for lending to green projects.
In its Action Plan on Sustainable Finance, launched today, the EBA urged financial institutions to “act now to incorporate ESG factors into their business strategies”, describing the matter as “urgent”.
The EBA is the European Union supervisor for lending institutions, investment firms and credit institutions in Europe, with a focus on financial stability. As part of the European Commission’s own Action Plan on Sustainable Finance, released last year, it has asked the EBA to provide guidance on how sustainability could be integrated into financial services legislation in Europe.
Its new plan to monitor climate risk will begin by looking at strategy and risk management for member bodies, with emphasis on metrics and disclosure. Successf…