The European Central Bank said Wednesday eurozone banks had to be ready to fully manage climate change-related risks by the end of 2024, or they could face enforcement action.

"Although banks have started to do this, there is a long way to go before they are climate change proof," Frank Elderson, a member of the ECB's executive board, wrote in a blog post.

The Frankfurt-based institution has assessed 186 banks, holding total assets of $25 trillion ($24 trillion), to build up a picture of how they are dealing with environmental dangers.

While the ECB found the situation was improving, it said that banks still need to do more to identify and manage climate change risks among their clients.

It has given banks individual timelines to adapt.

But by the end of 2024, they should meet all supervisory expectations, including by ensuring they have adequate capital to deal with climate risks.

"Deadlines will be closely monitored and, if necessary, enforcement action will be taken," said Elderson, without outlining what the action could consist of.

His comments came ahead of the COP27 climate change summit in Egypt.

The ECB conducted its first "climate stress test" at around 100 major eurozone banks earlier this year.

It gauged the impact of different transition scenarios and "extreme weather events" on banks' business.

Around 60 percent of the banks did not have an adequate plan to manage climate risks among their clients, whether they were physical (such as flooding or drought), or financial (such as an increase in the carbon price).

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S.Africa will need $500 bn to reach net zero: World Bank
Johannesburg (AFP) Nov 1, 2022
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