ECB Faces Pushback Over Climate Risk Formula

The European Central Bank (ECB) is facing pressure from banks to disclose its formula for calculating climate risk on collateral. The ECB recently decided to expand the list of collateral risks, citing a growing emphasis on climate risk. However, this decision has been met with criticism from some in the banking industry.

Denisa Avermaete, head of sustainable finance at the European Banking Federation, which represents national banking associations across the region, said that while the ECB's decision to expand the list of collateral risks is 'important,' it should be handled transparently. She stated that the ECB's decision is 'important' but should be done in a transparent manner.

The banks are pushing for transparency because they want to understand how climate risk will impact the value of their collateral, which can include assets such as bonds and loans. The banks believe that a clearer understanding of the ECB's formula will help them better manage their risks and make more informed decisions.