On 10 November 2025, the European Central Bank (ECB) issued a €187,650 penalty to ABANCA Corporación Bancaria, S.A. for failing to conduct a materiality assessment of its climate-related and environmental (C&E) risks.  

This is the first time a European bank has been fined for non-compliance with climate risk governance. It marks a shift from guidance to enforcement.

Since 2020, the ECB has made its expectations clear. Banks must identify, assess, and document their exposure to climate risks with the same discipline applied to credit or operational risk. This is now a supervisory requirement, not an ESG ambition.

The message is direct. The time for qualitative statements has passed. Supervisors now expect measurable, science-based assessments that demonstrate how climate risks are managed.

For banks, this is both a warning and an opportunity. Those that act now can meet regulatory expectations with confidence. Those that delay risk falling behind as enforcement becomes standard practice.

What happened

In December 2023, the ECB required Abanca to strengthen how it identifies and documents its exposure to climate and environmental risks. The decision set a clear deadline: complete a materiality assessment by 31 March 2024.

A materiality assessment determines which physical and transition risks are most relevant to a bank’s portfolio, capital, and strategy. Abanca did not meet the deadline. For 65 days, the ECB waited for documentation that never arrived, and applied periodic penalty payments totalling €187,650 under EU banking supervision law.

The amount is not the point. The enforcement is. The ECB is now using its supervisory powers to ensure that banks deliver on climate risk management requirements.

This follows a process that began with the ECB’s Guide on climate-related and environmental risks in 2020. In 2022, the ECB ran a climate stress test and thematic review that revealed large gaps across the sector. Many banks relied on historical data and qualitative judgments, unable to show measurable exposure to hazards such as flood, heat, or wildfire.

Each institution then received feedback and staggered deadlines to close these gaps. The first round expired in 2024. The Abanca fine is the first enforcement of that cycle. The ECB’s goal is not punishment but progress: ensuring every Eurozone bank can identify, quantify, and evidence its exposure to climate risk.

Why this matters

Climate and environmental risks are now part of prudential supervision. They carry the same weight as credit, liquidity, and market risks.

Banks must demonstrate how they identify and quantify these risks and how they integrate the findings into governance and capital planning. The expectation is for data, not narratives.

This shift has three direct implications for the financial sector:

1. Compliance is now measurable

Supervisors will evaluate whether climate risk frameworks meet the ECB’s 2024–2026 roadmap. Internal documentation must prove that processes are defined, implemented, and auditable.

2. Historical data is no longer enough

‍ Forward-looking climate models are now essential. Supervisors expect analysis based on physical hazard data and scenario modelling that reflects future volatility.

3. Risk management is moving into operations

Climate risk is becoming a core part of credit assessment, portfolio management, and stress testing. Risk teams need scientific data that integrates with existing systems and workflows.

The Abanca decision is not an isolated case. It signals the start of a broader enforcement cycle focused on accountability and measurable progress.

What banks should do now

Banks should act before enforcement reaches them. Supervisors have moved from guidance to compliance, and expectations are clear.

Every institution needs a framework to identify, quantify, and document climate and environmental risks. This is the foundation of credible risk governance.

Start with three essential steps:

1. Identify material risks

Determine which physical and transition risks affect your portfolios. Include hazards such as flood, wind, wildfire, heat, and hail. Review exposure across assets, regions, and sectors.

2. Quantify financial impact

Use forward-looking models across multiple climate scenarios and time horizons. Measure how those risks affect asset values, credit exposure, and capital requirements.

3. Document and evidence results

Ensure findings are transparent, traceable, and aligned with internal governance and supervisory expectations. Supervisors will ask for proof, not summaries.

To prepare, institutions should review data sources, fill climate coverage gaps, replace qualitative scoring with quantitative metrics, align reporting with ECB and EBA expectations, and build internal capability to interpret and communicate climate data.

Acting early reduces regulatory risk and strengthens resilience. Compliance is now measurable, and preparedness is becoming a competitive advantage.

How Mitiga Solutions helps

Mitiga Solutions provides the science and data needed to meet supervisory expectations on climate and environmental risk.

With EarthScan, our climate intelligence platform, banks move from qualitative assessments to quantitative, auditable insights. The platform combines climate science, high-performance computing, and risk modelling to measure physical hazards across assets, sectors, and time horizons.

EarthScan supports risk and sustainability teams through four main capabilities:

• Asset-level analysis. Identify exposure to hazards such as flood, heat, wind, wildfire, and hail. Analyse risk from 1970 to 2100 under multiple climate scenarios. ‍
• Materiality assessment. Evaluate which hazards are material to your portfolio using quantitative metrics such as Climate Value-at-Risk (CVaR). ‍
• Governance and documentation. Generate verifiable outputs that integrate into internal frameworks, Pillar 2 reviews, and ECB supervision. ‍
• Integration flexibility. Access results through the EarthScan platform or API and connect outputs directly to risk systems, stress testing models, and sustainability reporting tools.

Mitiga Solutions combines climate science, supercomputing, and financial modelling to deliver transparent, defensible data. This helps banks meet ECB expectations and prepare for future audits and supervisory reviews.

As enforcement grows, climate risk management will depend on data quality, transparency, and explainability. Mitiga Solutions provides the tools to meet that standard.

The bottom line

The ECB’s fine against Abanca signals the start of climate risk enforcement in European banking. Voluntary alignment is over.

Banks must now demonstrate measurable control of their exposure to climate and environmental risks. Supervisors want evidence, consistent data, and proof that climate risk is integrated into governance and capital decisions.

This is a compliance shift, but it is also an opportunity. Institutions that understand their exposure can protect portfolios, manage losses, and build trust with regulators and investors.

The ECB has made its position clear: climate risk is financial risk and enforcement has started.

If your bank is working to meet climate risk supervision requirements, our team can help you find the right tools to assess, document, and manage your exposures.

Book a demo to explore tailored solutions that fit your internal processes and regulatory obligations.