In its response to the consultation, Triodos Bank states that financial institutions should measure, monitor and manage financed emissions. Supervisors should act upon climate risk as a potential risk concentration in pillar 1. This should regard both financed emissions (scope 3 emissions) and financed pesticides.

And supervisors should apply a risk concentration add on if financed emissions of a bank this year are higher than financed emissions last year, because this would mean a bank is not on a path to zero emissions.

Also, Triodos Bank states that the supervisory review objectives or risk management approaches do not include an evaluation of financial institutions’ capital adequacy to cover climate-related financial risks. Thus, the Basel Committee's principles effectively miss impactful supervisory measures in cases where climate-related risks will be identified as material.

In essence, the supervisory review would be directed towards exploration of risks rather than ensuring financial institutions´ resilience against climate-related risks. The principles do not include incentives for financial institutions to change their behavior towards climate-related financial risks.

You can read Triodos Bank's complete response to the consultation here.