Climate and financial stability - European Commission

Climate and financial stability - European Commission

 

(...) Climate change is one of the most pressing issues of our time, and its impact on the financial system is a growing concern. A report by the European Commission published on 1 July sheds light on the risks that climate change might pose to financial stability in the European Union and takes stock of ongoing EU policy initiatives.

The report compiles data which shows that climate risks could lead to losses for financial and non-financial companies. It covers impacts on various parts of the financial system, including banks, insurers and investment funds. For example, based on 2023 stress tests from the European Central Bank, the median EU bank faces losses of 0.6 to 1% of its total portfolio over a modelling horizon of 8 years, though the estimates in the report should be seen as a lower bound of the actual impact.

The report is part of an ongoing learning process by regulators, supervisors and industry. (...)