Environmental fines

Translated by Alessandra Fumagalli 

The European Central Bank’s (ECB) main goal has always been price stability. The European bank institution supports a monetary policy, aiming at controlling inflation and fostering growth and development.  

This involves also environmental and climate change matters, that in the last few years have become the main goals for the European Union. 

Behind the European Legislation, that has been developing in these regards, whose aim is to be climate-neutral, with sustainable factories and transports in order to reduce pollution, climate objectives also relaunching the European economy, through green technology. 

In this regard, the ECB plays a fundamental role. The European Central Bank has the objective to evaluate how the transition towards a neutral society, in terms of carbon emissions, affects the European economy, in order to take into account the impact of such operation in the Central bank’s activities and banking supervision. The whole goal is to reach price stability and bank security. 

ECB’s activities in terms of environmental matters focus on the management of climate risks in the monetary policy and investment and financial system’s transactions, towards a neutral transition in terms of carbon emission and promotion of a better understanding of climate risks, in particular sustainable finance.  

As a consequence, the ECB decided to set a fine on four European Banks for climate failures. 

This is a result of not reaching the climate goals expected from the ECB. 

The European Central Bank has indeed set a list of expirations, by which the European Banks should have integrated the risks concerning climate change, floodings, drought and the transition towards new energy sources. Some banks, however, failed in meeting these needs. 

The sanction plan has firstly threatened 18 banks, but it will be applied only to 4 banks, because thanks to the ECB’s pressures, some banks were able to adapt to the directives. 

Fines will not be so high, they are just a symbol, in order to sensitize the banks to adapt to such norms, even if, generally, the ECB’s fines can amount to 5% of the average daily incomes of a bank. 

The banks are obviously collecting fines daily, and they are not covering their lack in terms of climate change and this will lead to higher costs in the future. 

The ECB strongly supports the gravity of this situation, because this instability will increase instability in the inflation and monetary’s management. 

Indeed in a situation where damages and uncertainty can reduce productivity, the banks must adapt every possible precaution in order to face an hypothetical crisis. 

If the EU’s engagement to reach the 2030’s objectives was not enough, something must be done, especially as far as the monetary policy is concerned. This is why these fines can contribute to a better fight against climate changes’ effects and in terms of environmental policy, in order to reach the 2030’s objectives, as promised. 

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