In a Bloomberg interview, Frank Elderson, Vice-Chair of the European Central Bank’s Supervisory Board, reported that ECB Banking Supervision has largely brought supervised banks to a point where they can manage climate and nature-related risks without resorting to periodic penalty payments, while signalling continued use of a proportionate “escalation ladder” for banks that lag on risk data aggregation and reporting. He described a multi-year supervisory sequence on climate and nature-related risks starting with supervisory expectations in 2020, followed by bank self-assessments and action plans in 2021 and a supervisory review in 2022. ECB Banking Supervision set an end-2024 deadline with interim milestones, including a March 2023 materiality assessment, and issued 32 formal decisions across three waves (22 in the first, nine in the second, and one in the third). Elderson said 108 of 110 banks met the climate and nature-related risk management milestone without periodic penalty payments, with the first wave delivered “all but two” within an extended period, while the later waves remain under assessment. Separately, he said the Supervisory Review and Evaluation Process has moved to a “two-tier system” for classifying findings into four categories, with the most material findings (F3 and F4) prioritised for supervisory follow-up. On broader supervisory simplification, he pointed to shorter and more targeted on-site inspections and reports, and a planned clean-up of guides and other publications to shorten or retire documents, improve consistency, and clarify their non-legally binding nature, noting it was too early to comment on any substantive change to the leveraged finance guide. On risk data aggregation and reporting, he said progress is visible but remains insufficient at too many banks, and that escalation may move from supervisory dialogue to non-binding letters and binding formal letters, with periodic penalty payments “neither imminent nor excluded”. He also flagged ongoing monitoring of synthetic risk transfers given inherent and rollover risks, and urged quick clarity on how and when to implement the Fundamental Review of the Trading Book in Europe, while reiterating support for the European Commission’s proposal.
European Central Bank - Banking Supervision 2026-02-19
European Central Bank Banking Supervision says 108 of 110 banks met climate-risk milestones without penalty payments and keeps escalation option for risk data gaps
Frank Elderson, Vice-Chair of the ECB’s Supervisory Board, stated that ECB Banking Supervision has enabled banks to manage climate and nature-related risks without penalties, while maintaining an "escalation ladder" for those lagging in risk data aggregation and reporting. He highlighted a supervisory process starting in 2020, with most banks meeting the 2024 risk management milestone. Elderson also noted ongoing supervisory simplification efforts and flagged concerns over synthetic risk transfers and the implementation of the Fundamental Review of the Trading Book in Europe.