Most banks in Germany expect huge climate impact within next decade

The vast majority of banks in Germany expect climate change and the political reactions to slow it will have a major impact on their business within the next ten years. A survey conducted by the Association of German Banks (Bankenverband) found that 89 percent expect "palpable" or even "grave consequences" by the climate crisis, and about half already use voluntary sustainability standards to prepare their workflows for tighter regulation. "Banks are ready to assume a key role in climate action, as they will have to fund the transition to a more climate friendly economy and society," association head Christian Ossig said, arguing that most banks are in favour of more ambitious climate policies. Ossig said lawmakers and the finance industry would have to "pull together" to put climate targets into action, adding that private banking institutions in the country stand behind the European Union's sustainable finance strategy. "We clearly have to speed things up regarding the mega-topic climate change and use all available options," Ossig said. He said the required sustainability analysis of credit lines and investment portfolios pose a huge challenge to the financial institutions but also offer a lot of opportunities. However, merely providing a "green" financial product range will not be enough, the association head cautioned, explaining that demand for these products still needs to pick up and has to accompanied by "an appropriate regulatory framework”. This would include measures like carbon pricing but also eased equity requirements for banks. Moreover, in order to make their sustainability analyses applicable, the banks depend on reliable and comparable data from companies, which for the most part are still lacking. "This data should be made available in a central register at the EU level. That will ensure a level playing field," Ossig said.

German banks are eager to avoid tighter national regulation in the context of a push by the government to bring green and sustainable finance in the county to scale and hope for a comprehensive EU rulebook. Germany's sustainable finance advisory committee in March tabled a set of national measures to anchor more environmentally friendly practices in the finance industry, which was criticised as "counterproductive" by many banks in the country as it would impose sustainability rules that European competitors do not have to abide by.