Eurozone banks should “urgently“strengthen the accounting of climate risks in their strategy, according to the results of the first stress test carried out by the European Central Bank, according to which: “two-thirds of the income» establishments are associated with polluting activities.
“60% of banks do not have an adequate climate risk management system”.
“Eurozone banks must urgently step up their efforts to measure and manage climate risksAndrea Enria, head of the ECB’s supervisory board, said in a statement on Friday. In January, the ECB launched this massive climate shock test with major eurozone banks, an unprecedented exercise for the institution. It aims to measure banks’ ability to absorb the effects of certain risks associated with global warming, whether physical (floods, droughts) or financial (ecological transition, rising carbon prices). The exercise, which involved 104 Eurozone banks, showed that “60% of banks do not have an adequate climate risk management systemAccording to the ECB.
Only 20% of institutionsConsider climate as a variable when lending“, the institution added. Gold”Almost two-thirds of banks’ revenues from non-financial businesses come from greenhouse gas-intensive industries“, according to the report.
In the short-term scenario, combined with increased risks of drought and floods, along with an increase in the price of carbon, an estimated 41 banks could experience a total loss.70 billion euros“. “It is very important that banks work more on their climate risk management system– concluded Frank Elderson, vice-chairman of the ECB supervisory board, during the press conference. These results will not directly lead to additional capital requirements, the ECB has already warned. But they will feed on the plan.”qualitative” named “supervisory review and evaluation process(SREP), which measures the risks affecting each bank. The president of the European Central Bank, Christine Lagarde, considers climate change one of the main risks for the economy and the banking sector in the coming years.
Source: Le Figaro
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