The European Central Bank concluded its Climate and Nature Plan 2024-2025 in January 2026, bringing to a close a two-year supervisory programme to raise the standard of climate and nature-related risk management across the banks it directly oversees through the Single Supervisory Mechanism. The ECB reported that supervised institutions are now better positioned to assess and manage both climate and nature risks than they were at the programme's outset, though the institution acknowledged that it had needed to issue binding supervisory decisions in a number of cases where progress was judged to be insufficient.
The plan encompassed the ECB's work across its dual role as monetary policy authority and banking supervisor, setting out milestones for banks to meet in how they identify, measure, report, and manage their exposure to physical climate risks — such as flooding, drought, and extreme weather — and transition climate risks arising from the shift to a lower-carbon economy, as well as the emerging category of nature-related financial risks linked to biodiversity loss and ecosystem degradation.
BINDING DECISIONS ISSUED WHERE NECESSARY
The ECB confirmed that it resorted to binding supervisory decisions in cases where banks failed to meet expected standards.
NEXT STEPS
The ECB has said it will intensify its work in three priority areas: navigating the transition to a green economy, including assessing banks' transition plans; assessing and taking into account the increased physical impact of climate change; and advancing work on nature-related risks, such as water scarcity. Climate and nature-related risks also remain a supervisory priority for 2026-28.