According to the website, Green Central Banking, a member of the European Central Bank (ECB) stated that banks’ transition plan targets and capital rules need to be linked. This entails:
- Banks to publicly disclose their transition plans
- Consequently, if a bank is not aligned with an envisioned plan, then it would translate into higher transitional risk and a capital add-on
- As per the website, the ECB has previously mentioned that the current capital requirements do not necessarily reflect climate-related financial risk
To read more, visit:
