The latest status report recorded the highest increase of banks reporting this disclosure. It should not be surprising; many regulators, including ECB (2020), in their guidance on climate-related risks, pay attention to the aspect of transmission channels and impacts on the risk profile of financial institutions.
Due to the atypical features of climate risks, their integration into risk management is not a painless task. However, it still has practical consequences, e.g. for the prudential frameworks applied to banks. Basel Committee on Banking Supervision (BCBS) investigates the extent to which climate-related financial risks should be explicitly incorporated into the existing Basel framework (Tajti, 2022).
European regulators consistently emphasize that banks need to speed up the development of climate-related risk models data collection to fill all the existing gaps and to fully integrate climate risks in their risk management framework (Mazza, 2022). Banks that were meticulous in their TCFD exercises should have an easier task ahead as they have already made some progress.
Unfortunately, the vast majority of the banks’ disclosures concerning the integration of climate factors into existing processes are still mostly qualitative, which contradicts TCFD's recommendations of having an appropriate balance between qualitative and quantitative information (TCFD, 2017). However, even with qualitative disclosures, it is possible to distinguish some good practices.