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Climate and environmental risks in the banking sector (NGFS stocktake, ?new stress scenarios…)

Climate and environmental risks in the banking sector (NGFS stocktake, ?new stress scenarios…)

Day 1 Morning

Wednesday 13 September

Room :

ROOM 2

Speakers

Chair
Jose Manuel CamPublic Authorithy
Chairperson - European Banking Authority (EBA)
Public Authorities
Nathalie Aufauvre
Secretary General - Autorité de Contrôle Prudentiel et de Résolution (ACPR)
Mercedes Olano
Director General, Banking Supervision - Banco de EsPublic Authorithyña
Industry Representatives
Maya Hennerkes
Director for Green Financial Systems - European Bank for Reconstruction and Development (EBRD)
Hiroyoshi Koizumi
General Manager of Sustainability Risk Management Office, Risk Management DePublic Authorithyrtment - Mizuho Financial Group, Inc.
Bertrand Lussigny
Deputy Secretary General - La Banque Postale

Context and objectives of the session

In the banking sector, climate change is recognized as the foremost existential threat, demanding global cooperation due to its widespread impact. The specific time horizon of climate change necessitates a long-term perspective, while today’s actions will shape the next three decades. Banks, exposed to trillions in carbon-intensive sectors, face financial instability from climate-related risks. Regulators, such as the NGFS and ESAs, are actively assessing these risks through stress tests. Disclosure requirements under the Pillar 3 framework can mitigate information gaps. The recent IPCC report underscores these risks while offering hope for mitigation efforts. However, government intervention is also essential for a smooth transition to a green economy, necessitating global coordination.

The session will focus on the current state of sustainability risk management in the banking sector, recent stress test results, and challenges in integrating sustainability risks into banking regulations.

Questions to be addressed.

  1. What is the current state of play regarding sustainability risk measurement and mitigation in the banking sector, and what are the lessons learned from previous stress tests?
  2. How can transition plans serve as valuable sources of information on sustainability risk, and what information in these plans is relevant for risk assessment? What are the policy priorities and timelines for leveraging transition plans for risk assessment?