Bank valuations at stake as EU splits with Wall Street over ESG

A man walks on a street with the European Central Bank (ECB) in the background in Frankfurt am Main, western Germany, on April 4, 2024. (Photo by Kirill KUDRYAVTSEV / AFP)

Frankfurt: The European Banking Federation (EBF) says lenders in the region won’t be able to compete with their US rivals if regulators continue to pile on environmental, social and governance (ESG) rules that Wall Street remains free to ignore.

The warning from the bloc’s main bank lobby comes as the European Central Bank (ECB) puts pressure on lenders to capture ESG risks, including in loan-loss provisions, marking a new frontier in ESG reporting standards.