Banks do recognize that environmental factors could be a source of financial risk. To properly identify, understand, measure, and manage this risk, banks’, internal systems, models, and processes, particularly those related to data collection, risk management, and credit approval processes are being revisited.While banks are making tangible progress, they are facing numerous operational and implementation challenges, many of which are neither originated, nor inherent to the banking industry. While some will need to be addressed at the level of individual organizations, others will benefit from collaborative approaches. To further strengthen the dialogue within the banking sector and to facilitate the discussion with the European Central Bank (ECB), a high-level Environmental, Social, and Governance Risk Roundtable (C-ESG Risk RT) was set up by the European Banking Federation (EBF) with the participation of 13 European banks. The EBF and ECB are acting in an observing capacity. The Roundtable focuses on climate risks with the objective of discussing current practices, identifying gaps, and promoting pragmatic and practical approaches, including interim solutions. |
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