In its response to the consultation, Triodos Bank states that climate-related financial risks should not solely be treated as a different form of credit risks. Climate-related financial risks are compounding risk, aggravating losses once a climate disaster materialises.

This justifies longer-term prudential considerations that limit exposures to assets that cause this compounding effect. Climate related risk can be of such a devastating nature that the only way to mitigate it in a credible way is to put maximum effort into prevention by ensuring that the financial industry uses its investing capability sustainably.

Therefore, Triodos bank proposes a large exposure limit that acknowledges the need to avoid potential stranded assets or a risk-concentration in harmful exposures.

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