Europe’s banks aren’t sufficiently considering risks from climate change and must “urgently step up efforts” to make sure they understand the possible impact of floods, wildfires and losses on investments.
That was a key conclusion from a climate stress test on 104 banks run by the European Central Bank and released Friday.
The ECB said that for now the climate stress test was a learning exercise that would not result in requiring banks to strengthen their financial buffers against possible losses from borrowers who can’t pay.
But the bank’s supervisory arm warned that as things stand now, 60% of the 104 surveyed banks have no framework for assessing the impact of climate risk on their financial solidity, and only 20% consider climate risk…
