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In L'Agefi, Sebastian Mack takes banks to task for the green transformation

Following the decision by the EU member states, the European Parliament has now also agreed on a negotiating position on the banking package. In the future, banks will have to take greater account of climate risks and draw up new transformation plans. Our Policy Fellow Sebastian Mack underlines the urgency of equipping bank supervisors with the competences to enforce the new rules.

In L'Agefi, Sebastian Mack comments on the proposal recently approved by the European Parliament's Economic and Monetary Affairs Committee to require banks to take climate risks into account. Currently, banking supervisors are still reluctant to price climate risks into the supervisory review and evaluation process (SREP) and to require banks to hold additional capital. Sebastian Mack therefore welcomes the fact that with the new rules "there will be legal clarity that banks are obliged to manage climate change risks and that supervisors must act in case of non-compliance". But before the new rules can come into force, the European Parliament still has to agree with EU member states.

An important innovation would also be the obligation for banks to draw up transformation plans. In these plans, the banks must show how they intend to bring their business in line with the European climate goals. Sebastian Mack criticises the still unclear powers of the supervisory authorities to enforce the transformation plans. This is because "neither the text adopted by the Parliament nor the Council's version explicitly states that supervisors will be able to use all their powers if banks do not comply with their transformation plans." Sebastian Mack therefore urges to clarify this point in the coming weeks during the final trilogue negotiations between the Council and the Parliament.

Read the full article (in French) here.