EU banks get world’s first ESG rewrite of capital rules

The sun has set behind the buildings of the banking district and the European Central Bank in Frankfurt, Germany, Tuesday, Oct. 10, 2023. (AP Photo/Michael Probst)

Brussels: In a global first, Europe’s main bank regulator is revising the framework that sets capital requirements so that lenders reflect environmental and social risks in mandatory, industrywide buffers.

The European Banking Authority (EBA) has identified “some short-term fixes” to minimum requirements – known as Pillar 1 – “that can already be implemented,” chairman Jose Manuel Campa said in an interview. Others will be phased in over time, with some requiring new legislation, the EBA said.