LONDON/BRUSSELS (Reuters) - Europe’s banks are not integrating climate change and other sustainability concerns into their risk management systems as quickly as regulators expect, a study by BlackRock for the European Union showed on Monday. In an interim report, BlackRock said it had analysed feedback from the region’s lenders and found most were only just starting to reflect environmental, social and governance (ESG) related risks in their internal processes. A final report, which will be used by Brussels to help develop new regulations, is due by April next year. “While interviewed banks often state that they have initiatives in place to enhance the integration of ESG risks, the majority have not formalised an ESG risk integration strategy with clear timelines and responsibilities,” it said. “With respect to climate risk, many smaller banks stated that they have not yet started its integration into risk management,” the report said. It also found that only a minority of regulators provide guidance to banks on ESG risks or reflect it in their oversight processes, such as through climate-related stress tests. “The majority of supervisors interviewed do not yet have any quantitative indicators in place to monitor and assess the exposure of supervised banks to ESG risks,” the report said. While some banks have begun to launch ESG-related products and make commitments to meet the terms of the Paris Agreement on climate, the report said that in the view of many civil society organisations, efforts by lenders so far fell short. “The Commission is committed to transparency. As promised, we published BlackRock’s interim report today,” a European Commission spokesman said. “This report is only a preliminary analysis of data collected so far. The final report is to be submitted to the Commission at a later stage.” The EU’s appointment in April of the world’s biggest asset manager to help it plan future prudential regulations has raised concerns about conflicts of interest. While the bloc’s Ombudswoman said last month that the Commission had failed to consider such conflicts properly, she did not cancel the contract. (This story corrects quotes attributed to the report throughout)