MNI BRIEF: Climate Lawsuit Threat To Banks, Watchdogs - ECB
Financials firms, central banks and regulators must prepare for growing climate-related litigation risk, Frank Elderson warns
Banks and regulators must be increasingly prepared for increased risk of climate-related litigation, following an “explosion” in the number of legal cases launched against the financial sector over the last two years, ECB Executive Board member Frank Elderson said in a speech Monday.
“We can't exclude that, in some jurisdictions, litigants will go for the jugular," he said, as he called on finance institutions to manage the risk that they may be held accountable for the obligation to reduce their emissions by 55% by 2030 compared with 1990 levels in line with the European Climate Law and the Paris Agreement, as well as an obligation to immediately stop financing new fossil fuel exploration.”
Central banks and supervisors may also be targeted, Elderson warned, “either to ensure that they are doing their part to protect fundamental rights and facilitate compliance with the Paris Agreement or to ensure that they are fulfilling their duties in terms of financial stability or consumer and investor protection.” Elderson’s remarks should be seen in the context of the ECB’s long-standing insistence that climate change risks create financial stability risks, and recent efforts both to shed light on and decarbonise its balance sheet.