From 2022, banks will respond to a detailed questionnaire. The objective is to measure their vulnerability to an increase in the price of CO2.
The European Central Bank will carry out its first bank stress test between March and July 2022 to assess the exposure of the euro area financial sector to natural disasters as well as to a faster-than-expected ecological transition.
Read alsoClimate: inaction could lead to a drastic loss of GDP, warns the ECB
The European banking supervisor intends to “identify vulnerabilities, best practices and challenges” for the banking sector, according to a letter published Monday by the ECB.
In particular, it will study the “vulnerability” of banks faced with the scenario of a “rapid rise” in the price of CO2 from 2022, as part of an accelerated transition to a carbon-free industry, and the “abrupt” adoption of measures to reduce carbon emissions. environmental regulation.
The main banks in the euro zone will have to indicate in particular “to what extent they depend on income” from industries with high CO2 emissions. The ECB’s questionnaire will also look at the quantity of greenhouse gas emissions that banks “finance”, for example through loans.
The stress test will also assess the institutes’ vulnerability in the event of flooding or episodes of intense drought and heat.
According to an ECB study, published at the end of September, on the economy as a whole, inaction by governments and companies in the climate field could cause a significant loss of gross domestic product in the long term in the euro zone.
From 2030, the lack of orderly measures to decarbonise the economy could affect the EU’s GDP to the point of losing more than 10% by 2100, compared to a scenario where governments would quickly put in place of active ecological transition policies.
The banking stress test will be based on the scenarios developed by the ECB as part of this economic study, specifies the banking supervisor.
“More and more frequent ecological shocks”
ECB President Christine Lagarde sees climate change as one of the major risks for the economy and the banking sector in the coming years.
“As the world heats up and weather conditions become more extreme, we will face increasingly frequent ecological shocks. We know from experience that these shocks can have profound effects on supply chains, ”Lagarde again warned in an intervention on Saturday.
The ECB decided this summer, on the occasion of a review of its strategy, to integrate new criteria relating to the climate into its policy, in particular concerning its asset purchases.