ESG Insider: Eurozone banks need to step up efforts to measure climate risk, ECB says

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发布日期: 2022年7月13日

Eurozone banks need to improve how they measure and manage climate change risk, the European Central Bank said on July 8 following the results of its first climate stress test of the banking sector.

Regulators are increasingly turning to climate stress tests to gauge banks’ exposure to future climate risk. Both the French central bank and the Bank of England have published their own tests, which indicated that banks have more work to do in understanding the impact of climate change on their books.

Around 60% of the 104 lenders that participated in the ECB exercise do not have a climate risk stress-testing framework, the central bank found. Most banks do not include climate risk in their credit risk models, and just 20% consider climate risk in their lending decisions, it said.

The tests also showed that the largest 41 eurozone banks face losses of up to €70 billion when confronted with a sharp and sudden rise in carbon prices as well as floods and droughts. The eurozone includes the 19 EU countries that have adopted the euro as their national currency. However, that €70 billion figure would likely be much higher in reality, the ECB said, as the tests reflected a “scarcity” of available data and did not account for knock-on economic effects like recessions tied to climate change impacts

And staying with green finance, in this week’s newsletter we look at Indian banks’ absence from the green bond market and why they are key to helping the country meet its climate goals. We also explore Bolivia’s attempts to tap South America’s lithium rush and why imports of battery components for electric vehicles are surging in the U.S.

In our weekly podcast, we bring you highlights from the GreenFin conference, which took place in New York in late June. One of the key topics of discussion was the evolution of ESG data. ?

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