Five years of progress in climate supervision
The European Central Bank's supervisory arm has published a report detailing good practices for climate and nature risk management. The compendium shares observations from the ECB's five-year program, reflecting progress since 2022 and incorporating EBA guidelines.
From self-assessment to leading practices
In November 2020, the European Central Bank (ECB) published its Guide on climate-related and environmental (C&E) risks, setting expectations for institutions to adopt a strategic and comprehensive approach.
Following self-assessments in early 2021 and a thematic review in 2022, the ECB set deadlines for banks to align fully with these expectations by the end of 2024.
This program has driven significant progress: in 2022, 25 percent of institutions had no practices in place, with only 3 percent demonstrating leading practices.
By the end of 2024, this dramatically shifted to just 5 percent having no practices, while 56 percent achieved leading practices for climate and nature (C&N) risk management.
The report notes that the European Banking Authority's (EBA) Guidelines on ESG risk management, applicable since January 2026, further reinforce these capabilities, many of which were already part of the ECB's supervisory focus.
Expanding the toolkit for nature risks
This updated report serves as a key supervisory publication, sharing observations and good practices to help significant institutions strengthen their climate and nature (C&N) risk management.
It updates the 2022 compendium, reflecting substantial progress made by institutions in meeting supervisory deadlines, including sound materiality assessments by March 2023 and full C&N risk integration into governance and strategy by end 2023.
A significant focus of the new additions is on nature risks, where methodologies are still nascent, alongside prudential transition planning, physical risks, and managing reputational and litigation risks.
The compendium also provides concrete examples tailored to support smaller institutions.
Progress, not perfection
This updated compendium underscores the significant progress banks have made in integrating climate and nature risks, particularly in response to supervisory deadlines.
While the report highlights numerous good practices, it implicitly signals that full, comprehensive integration across all exposures remains an ongoing journey for many institutions.
The explicit focus on nature risks and tailored examples for smaller banks provides crucial guidance for areas where methodologies are still developing.