Abstract
Financial supervisors like the European Central Bank (ECB) have been active by supervising the financial risk side of climate change, environmental degradation and other nature-related risks. The ECB can only take climate-related risks into account to the extent such risks relate to the tasks that have been conferred upon it. This article explores the legal basis for climate risk supervision and sets out what the ECB is currently doing on this front. At the same time, new legislative proposals to combat climate change and to address climate-related risks are under way. These proposals, together with other pressures from the market and the public, will increase the pressure on banks to look beyond risk mitigation and might compel banks to align their business model with the objectives of the Paris Agreement.
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