 Ladies and gentlemen, welcome also my part all those here in the room and also those who join us virtually and thank you very much Chiara for what I thought were very inspiring and very wise words to start off with. So it's a pleasure for me to be here in this room together with you here in Frankfurt and when I'm arriving this morning in such a large gathering of lawyers. You might know I'm a lawyer by training many times I'm surrounded by by by lots of people that know a lot about other things but it's good to be here in this family and I'm slightly reminded of these back to school feelings after after the summer. And I hope that my intervention today can channel that energy towards the major challenge of our time, the climate and environmental crises. After all, summers now have a very different feel and form than those that we remember from when we were younger. Some Europeans faced hell this summer record braving and breaking heat wave scorched the Mediterranean forest fires claimed lives and destroyed homes in Greece. Residents in northern Italy and Central Europe were hit by extreme flooding. And meanwhile, similar disasters have been unfolding worldwide. Canada is experiencing its worst wildfires season in on on record wildfires in Hawaii killed more than 100 people and recent flooding in China is thought to have displaced over 1 million people. Without human induced climate change these events would have been virtually impossible. Back in 2015, Mark Carney spoke about the strategy of the horizon. Age years on, we have arrived at that horizon and the tragedy is upon us and it has started to unfold. Today is therefore an appropriate moment to recall one of the key channels through which Mark Carney anticipated that the financial sector and financial stability would be affected by the climate crisis liability risk. And I'm and when I say that I'm referring to climate and environmental related litigation. A recent UN report observed that climate related litigation is central to efforts to compel both governments and corporate actors to pursue more ambitious climate change mitigation and adaptation goals. While governments were the most common targets of such litigation in the past, cases are now also increasingly being filed against corporates. For supervisors and banks alike. This is becoming a major source of risk that needs to be properly anticipated and addressed. And it is particularly important at a time when non financial but also financial companies, including banks are becoming the direct targets of such litigation. And this brings me to the key message of my remarks today. Litigants are coming after the banks come hell or high water. And the banks need to be prepared. The ECB's legal conference is the perfect forum to discuss this topic for two reasons. First, it is about the role of lawyers. And of course, and in the fight against climate in the fight against climate and environmental crisis. And second, as a banking supervisor, the ECB finds that banks still need to make significant progress in increasing their awareness of climate and environmental related litigation risks. And they need to be better prepared to address this risk. The rise in climate litigation should not come as a surprise. The network for greening the financial system, the NGFS, already identified it as an emerging source of risks for the financial sector back in 2021. And in fact, I also spoke about it, although it's slightly shorter than today, at the ECB legal conference two years ago. Since then, the number of cases has truly exploded. Globally, some 560 new cases have been filed since 2021. And against this backdrop, last Friday, the NGFS published two new reports on climate related litigation. The first provides an update on this trend and considers how it may affect banks and the financial sector. And the second of these two reports looks at how this risk needs to be addressed from the perspective of the supervisor. As the NGFS reports show, litigation first targeted states. One of the first landmark cases was the Urgenda case in the Netherlands in 2019. The Dutch Supreme Court, the highest instance, ordered the Dutch government to take more ambitious action to reduce its greenhouse gas emissions. And the success of the Urgenda case has since been replicated in cases before the highest courts in France, Ireland and Germany. Through naturally, though naturally with different legal arguments and tailored to each individual legal system. And these cases against states are often referred to as systemic climate cases. And have been launched by now in no fewer than 34 jurisdictions worldwide. And these cases bring about and accelerate changes in policy while also providing clarity on duties and responsibilities. But they are also an increasingly important source of transition risk for the economy and the financial sector. As they can lead to rapid court mandated pivots in public policy aimed at reducing greenhouse gas emissions across the economy. And moreover, we have recently seen a remarkably increased, not just in cases against states, but in cases against corporates. Litigation has been launched against a wide range of companies across various sectors of the economy. Fossil fuel and energy companies have been obvious targets, but also car manufacturers, airlines, food companies and producers of concrete and plastics. A wide variety of legal arguments are being used as the basis for such claims. We are seeing claims for damages under tort law, for breaches of corporate due diligence laws and for greenwashing. And we are also increasingly seeing non-governmental organizations buying shares in companies so that they can subsequently attempt to make the directors personally liable for breaching their fiduciary duties to adapt the company to the climate transition. A telling aspect of this trend is the strategic approach that these litigants take across the board. Their lawyers build their cases on the arguments and the experiences of peers in other jurisdictions. Co-operating through cross-border networks while also developing jurisdiction specific arguments and strategies. Now, a line of argument that has been successful in one jurisdiction does not necessarily lead to a similarly successful outcome in another, but some arguments have been replicated in multiple jurisdictions. As an example, consider a legal strategy that has proven to be particularly potent in recent years. Once a case against the state has established that the fundamental rights of citizens have been violated, we have seen subsequent cases use this as a basis to argue that also private companies have a duty of care under civil law to protect citizens' fundamental rights. In practical terms, this means a duty to have a realistic and credible plan to reduce their greenhouse gas emissions. In the Netherlands, this was the winning argument in the first instance decision in the case against Shell. The court ordered Shell to reduce its emissions by 45% by 2030 compared with 2019 levels, across all activities and all jurisdictions in which it operates, including Scope 3. A similar line of reasoning is being used in the case against the Italian company Eni and its shareholders. And these cases are particularly interesting because they do not focus on damages. Rather, they look at the individual's firm's contribution to global emissions and their duty to do their fair share to reduce them. In the Shell case, for example, the district court found that while the Paris Agreement is not binding on companies per se, they nevertheless have an obligation to comply with the emission reduction pathway established by the International Panel on Climate Change. The Shell case is currently under appeal. But if the decision by the district court were to be affirmed by the highest court, it could establish a legal obligation under Dutch law for all corporates to proactively reduce their emissions in a way that is aligned with the objectives of the Paris Agreement. This would have major repercussions and would be quite frankly revolutionary. Such a duty is not currently priced in two, nor part of firm's business and transition plans. Up to now, the focus on liability risk has involved looking at actions for damages. And the assumption has been that this risk is somewhat remote because causation has been difficult to establish. Now this assumption may turn out to have provided a full sense of security. First, because attribution science may make it easier to prove causation. And second, because Shell-like fair share cases take a different approach and don't need proof of causation. In any event, these cases pose obvious risks for the financial sector. Companies may face significant direct and indirect financial losses. And we are not only talking about the costs of damages, fines, legal costs and the impact of the company's share price. There could also be potential risk to a company's viability if a ruling were to result in unexpected adaptation costs or outright stranded assets that have not been priced in previously. Such a ruling would have an impact on the defendant in the specific case, but other companies in the same sector and the banks that finance them might just as well be impacted. However, banks, focusing on banks a little bit more as a banking supervisor, will not only be affected indirectly, they may well be sued directly. In fact, this is already happening today. Litigants are turning their attention to the financial sector with the idea that if they sue the banks, they can somehow turn off the tabs of funding to those high-emitting companies. And as I said, we are already seeing the first examples. There have been cases brought against financial institutions for greenwashing, as well as cases brought against the trustees of a pension fund. We have seen the first case taken directly against the bank under corporate due diligence legislation in France for its role in financing the expansion of fossil fuels. And we cannot exclude that in some jurisdictions, litigants will go for the jucular. Like in the Shell case, they could argue that banks also have a duty of care under civil law to protect fundamental rights, and that they must have plans in place to reduce emissions in line with the Paris Agreement and the European Climate Law. In other words, plans to reduce their emissions by 55% by the year 2030, compared with 1990 levels, and to immediately stop financing new fossil fuel exploration. Now, part of the reason why we must take this risk seriously is because the litigants, and in these cases the plaintiffs, have proven to be very serious players. Most cases are brought by or supported by NGOs, and we aren't just talking about some activists turning up outside the courtroom with cardboard placards. No, the litigants in these cases are sophisticated, and they use their transnational networks to build precedents across borders. They are well funded, well connected, and well organized, and they can and do hire the best and brightest lawyers in the field. So let me now turn to the more practical part of this speech, or the homework, if I may again draw a little bit of a parallel to the back to school analogy of the beginning of this talk. How can banks properly address and mitigate climate-related litigation risk? And how can potential supervisors guide them? I will mention two strands of thought here. The first is what I would call the bread-and-butter guidance. In 2020, the ECB published its Guide on Climate and Environmental Risks, and this guide contains several expectations that can help to address climate-related litigation within existing categories of risk. And these include the need to evaluate litigation risks, define tasks and responsibilities relating to climate risks, and conduct climate-related due diligence. And with its 2022 thematic review, the ECB banking supervision went a step further, setting institution-specific remediation timelines for meeting all the expectations of the Guide of 2020 by the end of 2024, including intermediate deadlines of last March and the end of this year. And we also provided a companion of good practices implemented by supervised banks, including practices to address climate and environmental-related litigation risks. Now I recently asked the CEOs of some banks under our supervision to do me and actually to do themselves a favor. And I suggested to ask their general counsels how closely they are following developments in climate and environmental-related litigation. Is Urgenda a household name? Has the Shell case been analyzed in depth? And have the possible repercussions for the bank being discussed in detail in a recent board meeting? Have the avenues of possible direct litigation against banks being considered? Has the coverage of personal liability insurance for board members being checked in case their bank was found to be subject to the same obligations as Shell was in first instance and second if their bank were to be in breach of that? Now today I repeat this message to all CEOs, their general counsels and to all executive and non-executive board members of the banks under our supervision. Get up to speed. Get up to speed with this trend and mitigate the associated risks for your institution. Now we as supervisors have homework to do as well. The NGFS report, so the network on the greening of financial system. The NGFS report on micro-potential supervision of climate-related litigation risks published last Friday sets out additional potential options for supervision. It emphasizes the need for supervisors to take a risk-based approach which can include performing a materiality assessment of risks at the broader jurisdictional level or more granular exposure analysis at the entity level. And we should not forget that central banks and supervisors might also be the targets of climate and environmental-related litigation. Either to ensure that they are doing their part to protect fundamental rights and facilitate compliance with the Paris Agreement or to ensure that they are fulfilling their duties in terms of financial stability or consumer and investor protection. The second strand of thought is the well-known saying if you fail to plan, you plan to fail. Banks need to be aware that in certain jurisdictions the impact of climate-related litigation could dig right down into the viability of their business models. And given the determination of the NGOs and their neck for forum shopping, choosing the jurisdiction most likely to provide a favorable verdict, we don't know how many banks they will be aiming for in the end. And to address this source of litigation risk, the best advice that I can give to banks is that they should start putting in place Paris-aligned transition plans. And when I say this, I do not mean a slick advertising campaign with glossy photos of rainforests that is just a recipe for greenwashing accusations. What I mean is realistic, transparent, and credible transition plans that banks can and actually do implement in a timely manner. Having such plans in place requires banks to ensure that they have accurate granular data, that they conduct a robust materiality assessment, that they integrate transition planning into their internal discussions and strategic decision-making, and that they establish proper internal governance to this effect. With these elements in order, banks should be able to communicate how they are positioning themselves throughout the transition to a climate-resilient and sustainable economy. And this will then demonstrate the degree to which they are doing their fair share. And moreover, a transparent and credible transition plan should enable stakeholders to fully understand the risk environment in which a bank operates. And therefore, clearly articulating the processes and actions related to the transition plan should also significantly contribute to reducing litigation risk. And this is particularly important when we look at the feedback loop between climate and environmental-related legislation and litigation. It is only a matter of time before transition plans become mandatory under EU law. There are now three pieces of legislation in the pipeline that will require banks to put transition plans in place. The corporate sustainability reporting directive, the proposed corporate sustainability due diligence directive, and the recent capital requirements directive proposal. And this new legislation alone could prompt further climate litigation, with litigants finding additional legal basis for their claims. Now of course, no one, not supervisors, not legislators, not even the courts can expect individual companies or banks to single-handedly solve the climate crisis. However, based on emerging case law and the evermore stringent legislation on transition plans, we can no longer afford the luxury of simply assuming that individual companies do not have a duty to do their fair share in the fight against climate change. Banks and supervisors alike must, if only as a precaution, manage the risk of the higher courts finding that this is already a binding duty today. One last point. That's always a good moment in the speech, isn't it? One last point. Today, I have mainly used the phrase climate-related litigation, which is focused on reducing greenhouse gas emissions, but they shouldn't be blind to other trends, such as the rise in environmental-related litigation more broadly. As alarm at the decline in nature and biodiversity grows, with some considering that humanity has become a weapon of mass extinction. This is the Secretary General of the United Nations. We can expect litigants to turn to the courts, drawing inspiration from their successes in the area of climate. There have already been several cases seeking to hold supermarkets, food producers, and even a bank accountable for deforestation in the Amazon. And this trend is likely to gather momentum as legislation on supply change enters into force. The deforestation regulation and the proposed corporate sustainability due diligence directive being two key examples amongst others. And arguments about companies' duty to do their fair share to protect fundamental rights by reducing greenhouse gas emissions could also be applied to mitigating other types of environmental degradation. Let me conclude. We have arrived at the horizon of the climate crisis and at the horizon of the climate and environmental-related litigation risks. Banks still have a lot of homework to do. Address to address this risk in terms of both meeting the ECB supervisory expectations and by putting adequate transition plans into place. And this is all the more important given that litigants may increasingly target banks and the wider financial sector with the aim of driving funding away from carbon-intensive sectors and towards the transition. And we need to take action now to anticipate and mitigate this source of risk. But I would like to end on a little bit more personal note by returning to the legal profession that is scattered in such a bouncy here today. Lawyers might sometimes see themselves as the upholders of tradition rather than as drivers of change. They might not necessarily see their work with a pen and paper in front of a computer or in the courtroom as having a dramatic physical impact on the world, much less saving the planet. But with climate and environmental-related litigation, it's different. The lawyers involved in these cases, be it as counsel, as judges or as academics, see that urgent change is needed to protect humanity, by holding society to the commitments of the Paris Agreement and to protect citizens' fundamental rights using the rule of law to achieve these goals. And it brings to mind a poem, the poem Digging by C. M. Moschini, in which he reflects on whether his creative endeavors could bring the same value to society as his ancestors' work, digging the land to plant and harvest food. And he reflects on how to balance his wish to honor his forebears with his drive to follow his own way, using a pen instead of a spade. And he then concludes, and some of you might know this, between my finger and my thumb, the squat pen rests. I'll dig with it. Now lawyers today are also taking up their pens to support the world on a Paris Line path. And their pens set in motion. Set in motion depends of judges. Depends of judges may well induce real change. And banks must manage all their material risks, including their climate and environmental-related litigation risks, come hell or high water. Thank you.