EU Banks Gear Up for Climate Resilience

Moving towards a sustainable financial future, in the end of 2023 the European Banking Authority (EBA) has rolled out the final templates for the Fit-for-55 climate risk scenario analysis, a one-of-a-kind exercise that involves 110 EU banks.

The One-off Fit-for-55 climate risk scenario analysis is part of EBA’s Climate Stress Testing task. Its purpose is to assess the resilience of the EU banking system to the potential impact of climate risks, in line with the European Commission mandate in the scope of its Renewed Sustainable Finance Strategy.

The templates have been developed for the purpose of conducting a data collection exercise involving 110 EU banks, aimed at gathering information pertaining to climate-related and financial aspects such as credit risk, market risk, and real estate risks.

This data collection initiative commenced on December 1, 2023, and is scheduled to complete on March 12, 2024.

Banks are asked to report aggregated and counterparty level data as of December 2022. The inclusion of counterparty-level data will facilitate the assessment of concentration risk stemming from significant climate exposures, while also enabling the identification of amplification mechanisms and evaluation of secondary effects. The aggregated data, on the other hand, will provide insights into the broader climate-related risks within the banking sector.

The templates refer to the specific version of the supervisory reporting requirements in place as of December 31, 2022.

This implies the use of FINREP and COREP standards for all templates, as for the EBA Reporting Framework 3.2 (applicable to reports up to December 31, 2022). In case of resubmission of FINREP and COREP reports, the templates should be completed with the most recent data.