insights on concentration risks into a practical instrument are on - going. one option that is being looked into is a quantitative concentration limit, either absolute or relative. this limit would then be subject to supervisory reporting, disclosure or an additional capital buffer. and in case of a breach of the limit, a range of supervisory measures could be considered, such as a mandatory notification in accordance with the large exposures framework or a deduction of the excess part of the concentrated position from the bank's capital. if this concentration limit were to become part of the prudential framework, it could well be phased in to give you, banks, time to make the necessary adjustments. i do want to stress, though, that our ideas on concentration limits are very much in the proposal phase. de nederlandsche bank is looking forward to comments on this proposal and to the results of any consultation rounds on the eba discussion paper. these could in turn help us to improve the proposal. so far, i have discussed climate and environmental changes as a source of prudential risks. however, some banks also consider these changes, and the related changing stakeholder preferences, as an opportunity to change their strategy and business model. for example, i find it promising to see that a number of banks are committing, 4 / 6 bis - central bankers'speeches themselves, to net - zero initiatives. such as the banks that choose to align with the paris agreement by signing the commitment statement of the net - zero banking alliance. institutions that have signed this statement have 18 months to do a number of things. they need to identify operational and attributable green house gas emissions from their lending and investment portfolios. and then they need to set specific targets, for both 2030 and 2050, so that they can align with the trajectories towards net - zero in 2050 or earlier. to achieve these targets, banks might need to adjust their business model and their range of products and services. or they may need to adjust their decision - making process and thus adapt their governance structure and risk management procedures. it is important that banks provide qualitative and quantitative disclosures to support their commitments. as mentioned earlier, the recent ecb assessment shows that banks do not fully meet ecb expectations on disclosure of c & e risks. and this is where the final risks i want to mention today, occur. reputational and litigation risks. these risks follow from an increased stakeholder awareness for a netzero society

. for instance, if stakeholders feel that a bank is not living up to its commitment, its reputation could be harmed. activist measures or changes in consumption patterns could follow. the goal being, ultimately, to drive banks towards a more environmentally friendly business model. banks may also be exposed to an increasing litigation risk. if a bank, as a signatory to a climate commitment, does not live up to it, not only could its reputation be harmed, it could even be held liable, for example by ngos. and so not living up to a climate commitment, for instance by not providing sufficient qualitative or quantitative disclosures, may lead to reputational and litigation risks that could have financial consequences. i'm wrapping up. today, in talking to you about the risks of global warming, i am not crying wolf. i, and many with me, know that the threat is real. that we need to act. that we need to make significant progress in the pathway to net - zero. as a sort of shepherd of financial stability, i want to do what i can to protect our society against the wolf that is global warming. i want to do what i can within my mandate as supervisor. but global warming knows no borders. not between sectors. not between countries. global warming affects all of us. everyone. everywhere. and so, we will only succeed if everyone, everywhere, does their part – governments, banks, and supervisors. if everyone, everywhere, within their respective mandates or from within their business operations, contributes to achieving our common goals – protecting lives and livelihoods. 5 / 6 bis - central bankers'speeches so with that, comes a different cry. with that, comes a rallying cry. a cry to move from a sense of urgency to a sense of action in the fight against global warming. i hope you are with me. thank you. 6 / 6 bis - central bankers'speeches