Banks as handmaidens for the green transition

• Department of Economics
• Department of History
• Department of Law
• Max Weber Programme for Postdoctoral Studies
• Robert Schuman Centre for Advanced Studies
• Department of Political and Social Sciences
• Florence School of Transnational Governance
• Central Coordination Unit
• Finance and society

This event is organised by the Finance and Society interdisciplinary research cluster. It will discuss the potential obstacles for regulatory activism and climate diplomacy led by EU institutions, in light of European domestic politics and a potential setback in the U.S. agenda on climate change.

The EU’s new Capital Requirements Rules for banks introduce far-reaching rules for qualitative management of climate risks by banks. They will be obliged to draw up concrete and comprehensive transition plans, assess climate risk in their portfolios and devise policies on the mitigation of those risks. The rules will have immediate effects on banks' relationships with their customers. They are expected to offer support to their clients in terms of transition to a sustainable environment, so that they reduce the use of fossil fuels in production processes.

Europe is leading the way in this area, partly because steerage from International Standard setters such as the Financial Stability Board and the Basel Committee for Banking Supervision were significantly delayed after the Trump administration shelved plans by these bodies in this area. Outside official channels, there has been the work of the Network for Greening of the Financial Sector (NGFS), an initiative of major European central banks in collaboration with the People's Bank of China, the Singapore regulator, Australia and Canada. The U.S. Fed joined recently this initiative. The preparatory work by the NGFS and, above all, the activist stance of the European Commission, the ECB and the EBA have led to these sweeping changes to the rules for banks.

The seminar will discuss, inter alia, how robust such regulatory activism and climate diplomacy led by EU institutions can be, given the political pushback in European domestic politics and a conceivable setback in the U.S. agenda on climate change.