Governance Briefing — October 17, 2024

Executive briefing: On 17 October 2024 the European Central Bank (ECB) published an addendum to its Guide on climate-related and environmental risks. Boards of significant institutions must prove end-to-end governance of climate risk data, scenario testing, and remuneration alignment ahead of the 2025 supervisory deadline.

Key governance signals

• Board oversight tests. Supervisors will challenge whether boards approve risk appetite metrics, receive decision-useful dashboards, and oversee model validation.
• Data governance. Banks must document data lineage, controls, and remediation plans for climate metrics feeding into ICAAP, stress testing, and disclosures.
• Remuneration linkage. The guide emphasises aligning senior executive incentives with climate risk management objectives.

Action checklist

• Map board reporting packs to ECB expectations, ensuring minutes capture challenge of scenario design and remediation progress.
• Strengthen data governance playbooks for climate metrics, integrating them with model risk and internal control frameworks.
• Review remuneration policies to confirm climate risk management objectives influence variable pay and performance scorecards.

Sources

• ECB press release on updated climate risk expectations
• ECB Guide on climate-related and environmental risks: 2024 addendum

Zeph Tech helps euro-area banks evidence board challenge on climate risks, data lineage controls, and remuneration alignment to satisfy ECB supervisors.

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