Climate transition plans for banks: EU legislators on a razor’s edge

(EurActiv, 16 Feb 2023) EU legislators are currently discussing the introduction of mandatory climate transition plans for banks. The European Commission, Council, and Parliament will soon start trialogue negotiations, and while all three seem to agree on the idea itself, differences remain in how these plans are defined, explains Anuschka Hilke.

Anuschka Hilke is director of the finance program at the Institute for Climate Economics (I4CE).

The European Parliament has adopted its final position on the Banking package. The package consists of a revision to the Capital Requirements Directive and Regulation and Solvency II rules.

This is done in order to implement the Basel III international framework which has the objective of increasing the resilience of the banking sector to future financial crises. Yet, another important requirement has been included to address climate change. 

The text obliges banks to adopt climate transition plans as part of a broader ambition to better manage environmental, social and governance (ESG) risks.

This new obligation has been proposed by the Commission and is confirmed in the positions of the European Parliament and Council. I4CE has supported the discussions on climate transition plans for banks through dedicated research for more than a year now. 

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EurActiv, 16 Feb 2023: Climate transition plans for banks: EU legislators on a razor’s edge