ECB Penalizes ABANCA Over Failure to Assess Climate Risks
- Olivia J Mathai
- Nov 17
- 2 min read
By: Olivia M
The European Central Bank (ECB) has issued periodic penalty payments totaling €187,650 against ABANCA Corporación Bancaria, S.A. The fine was imposed because ABANCA failed to sufficiently comply with a key supervisory decision regarding the management of climate-related and environmental (C&E) risks.
The Compliance Failure
The penalties stem from ABANCA's non-compliance with an ECB decision from December 1, 2023, which mandated that the bank conduct a thorough materiality assessment of its C&E risks. This assessment was required to identify and document the material risks the bank is exposed to, with a compliance deadline of March 31, 2024.
ABANCA missed this critical deadline, failing to meet the requirement for 65 full days in 2024. The size of the penalty (€187,650) was calculated based on the materiality and duration of the infringement, alongside the bank's daily turnover.
ECB's Escalating Supervisory Measures
The ECB's action is part of a broader, structured effort to ensure all significant institutions properly manage C&E risks. This process began in 2020 with the publication of the ECB Guide on climate-related and environmental risks, which set out initial supervisory expectations. Following a 2022 climate risk stress test and thematic review that revealed significant shortcomings, banks were given specific, staggered deadlines to meet these expectations.
When banks fail to adhere to these deadlines, the ECB escalates its measures from supervisory expectations to legally binding decisions that include the threat of periodic penalty payments. These payments are an enforcement measure designed to compel compliance, accruing daily until the required action is taken. The bank retains the right to challenge the ECB's decision before the Court of Justice of the European Union.
How Can DT Master Carbon Help?
This enforcement action highlights the growing regulatory pressure on financial institutions to not just acknowledge, but quantify and manage their exposure to climate-related risks, specifically mandating a materiality assessment. For banks like ABANCA, non-compliance means financial penalties and reputational damage. DT Master Carbon (DTMC), through its focus on providing robust carbon management and data solutions, is uniquely positioned to assist financial institutions in meeting these stringent requirements. DTMC's services can provide the accurate, auditable data and methodologies needed to conduct the precise materiality assessments and risk identification the ECB demands. By leveraging DTMC's expertise in calculating and verifying emissions data and transition risk metrics, banks can ensure full regulatory compliance, effectively reinforce their identification of C&E risks, and avoid significant financial penalties.
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