The ECB has imposed periodic penalty payments amounting to €7.55 million on Crédit Agricole for failure to comply with ECB decisions on climate-related and environmental risks.

Biodiversity is declining at unprecedented rates in human history. Research by the Network for Greening the Financial System, as well as several Central Banks, has warned that biodiversity loss and ecosystem degradation pose material economic and financial risks.

To address this, the ECB has already taken several steps to ensure that banks properly identify, assess and manage climate and environmental risks. In 2020, the ECB published its Guide on climate-related and environmental risks, which explained how banks are expected to prudently manage and transparently disclose such risks. In 2022, the ECB conducted a climate risk stress test and identified relevant shortcomings in a thematic review. In view of the findings, all significant institutions received feedback letters with bank-specific staggered timelines for adequately managing their C&E risks in light of supervisory expectations.

In November 2025, the ECB fined the Spanish ABANCA for failing to sufficiently identify climate-related and environmental risks, and now it has done the same with Crédit Agricole. 

Crédit Agricole is a major financier of forest risk commodity companies. Between 2020 and 2025, it has provided more than USD 1 billion in credit to companies like pulp giants Suzano, Klabin and CMPC, traders including ADM, Bunge, Cargill, and LDC and it holds investments in major meatpackers, including Marfrig and Minerva. 

Financing companies linked to deforestation and ecosystem conversion exposes banks to transition, legal, reputational and physical risks. Properly identifying and managing these exposures is therefore central to meeting supervisory expectations on climate and environmental risk.

In November 2023, a number of NGOs, including Forests & Finance members, filed a complaint with the French National Prosecutor’s Office against Crédit Agricole, requesting a criminal investigation into Crédit Agricole’s financing of Brazilian beef companies linked to illegal deforestation in the Amazon.

Earlier this month, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) launched its Business and Biodiversity report. One of its key messages is that “All businesses depend on and impact biodiversity and can be agents of positive change.” For financial institutions, this means that nature-related risk is not peripheral but systemic.

Identifying, measuring and timely disclosing the climate and environmental risks is only the first step. Supervisory authorities are increasingly making clear that banks must demonstrate credible risk management and governance.

The ECB’s action sends a signal to other European banks with significant exposure to forest-risk sectors: nature-related financial risks are now firmly within the scope of prudential supervision.

This article was originally posted on the Forest and Finances website, here.