Only a small proportion of EU banking transactions are green, and many banks lack the data to determine their carbon footprint, according to the European Banking Authority. In March, the EBA submitted proposals to banks on how they should report environmental, social impact and corporate governance risks using the green asset ratio indicator, which aims to identify the proportion of green business in institutions' overall portfolio. The EBA says this is currently 7.9% for European banks, based on a study of 29 institutions from 10 countries that account for around half of total deposits in the EU. The regulator also calls for greater disclosure on transition strategies and greenhouse gas emissions to ensure that banks and supervisors can assess risks accurately. More than half the exposure to larger corporate customers of the banks surveyed was in sectors that could be sensitive to climate transition risk.

The German government has launched a green finance strategy to steer capital toward environmentally responsible projects. The plan, which comprises 26 individual measures, aims to support the EU’s target of achieving carbon neutrality by 2050. The Berlin government intends to introduce a traffic light system to guide investors toward sustainable projects and away from others that put the environment at risk.

Three-quarters of private clients believe their investments should have a positive impact and 57% say the Covid-19 pandemic has strengthened that view, according to a survey by Deutsche Bank International Private Bank. More than half of respondents say that ESG investing helps manage risk, with climate change the most important element.