The European Central Bank (ECB) has imposed periodic penalty payments totalling €7,551,050 ($8.16 million) on Crédit Agricole for failing to comply with a supervisory requirement related to climate-related and environmental (C&E) risks.
The penalty follows an ECB decision dated 8 February 2024, which required the French banking group to conduct a materiality assessment of its C&E risks. Under the decision, Crédit Agricole was instructed to strengthen its identification of material climate and environmental risks to which it is or could be exposed. The ECB set a compliance deadline of 31 May 2024 and provided for the accrual of periodic penalty payments in the event of non-compliance.
According to the ECB, Crédit Agricole failed to meet the materiality assessment requirement for 75 full days in 2024, triggering the enforcement measure.
In determining the level of periodic penalty payments, the ECB considers the materiality of the infringement, the duration of the breach and the daily turnover of the supervised entity. Such penalties accrue on a daily basis for as long as the infringement continues and are intended to compel compliance with supervisory decisions or regulatory obligations.
The move forms part of the ECB’s broader escalation process to ensure that banks adequately identify, assess and manage climate-related and environmental risks. Since 2020, the central bank has progressively tightened supervisory oversight, beginning with the publication of its Guide on climate-related and environmental risks, which set out expectations for prudent risk management and transparent disclosure.
In 2022, the ECB conducted a climate risk stress test and carried out a thematic review that identified significant shortcomings across institutions. Following these findings, all significant banks received feedback letters outlining bank-specific timelines for addressing C&E risk management gaps. Where deadlines were missed, the ECB moved to impose binding requirements backed by periodic penalty payments as an enforcement mechanism.
Crédit Agricole may challenge the ECB’s decision before the Court of Justice of the European Union.
