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Sustainability risks in the banking sector (closing risk measurement gaps, prudential treatment, stress tests, transition plans…)

Sustainability risks in the banking sector (closing risk measurement gaps, prudential treatment, stress tests, transition plans…)

Day 1 Morning

Wednesday 21 February

Room :

ROOM 2

Speakers

Chair
François Haas
Deputy Director General, Financial Stability & Deputy Secretary General - Autorité de Contrôle Prudentiel et de Résolution (ACPR)
Public Authorities
José Manuel Campa
Chairperson - European Banking Authority (EBA)
Edouard Fernandez-Bollo
Member of the Supervisory Board - European Central Bank (ECB)
Industry Representatives
Line Asker
SME Sustainability - DNB Bank ASA
Harm Bots
Chief Executive Officer and President of MUFG Bank (Europe) N.V. and Head of EU - MUFG Bank (Europe) N.V.
Steven Vanackere
Vice Governor - National Bank of Belgium
Other stakeholder & expert
Julia Symon
Head of Research and Advocacy - Finance Watch

Objectives

In the context of climate and environmental risks in the banking sector, the consensus is that climate change is the most pressing challenge today. It presents global concerns, requiring international cooperation for ambitious mitigation goals. The banking sector faces physical and transition risks that could impact financial stability. Regulators play a crucial role in ensuring stability amidst climate risks.

Efforts are global to address these risks and incorporate them into the financial sector. The Pillar 3 framework promotes climate-related disclosure requirements for banks, enhancing decision-making. The Network for Greening the Financial System (NGFS) has developed scenarios to analyse climate risks, including short-term impacts and extreme weather events.

In the EU, ESAs and the ECB are involved in stress tests to assess the resilience of the financial sector to climate-related transition risks. Governments play a role in organizing the transition to a carbon-free economy. Coordination at the global level is crucial due to spill overs of sustainability-related negative impacts.

Efforts are coordinated globally to address these risks and incorporate them into the decisions of the financial sector. The Basel Committee on Banking Supervision (BCBS) is analysing climate change-related risks and potential gaps in the regulatory framework.

The session will address the state of sustainability risk measurement and mitigation in the banking sector in the EU and globally, discussing challenges and proposing possible policy priorities in this respect.

Points of discussion

  1. Learning on the former stress tests (EU, NGFS, …), what is the current state of play regarding sustainability risk measurement and mitigation in the banking sector? What is the evolution of the risk profile of the banking system?
  2. What are the main challenges posed and related priorities imposed by the incorporation of sustainability risk in the bank regulatory and supervisory framework?