Current and Future Prudential Requirements Regarding Environmental Risks

Abstract

The article is devoted to environmental risks, as part of the broader concept of the environmental, social and governance risks and reviews their future integration into the prudential framework. These risks have been identified by the European commission as the three dimensions of sustainable finance, therefore introducing and/or improving its assessment and management in banks is essential for the future of the green transition. The proposed amendments to the legislative package for the capital requirements envisages changes in risk management, internal management and supervisory assessments. This affects the processes and analysis in banks, therefore it is important for them to be informed and prepared in a timely manner.