Some sectors are more vulnerable than others

This confirms the conclusion that banks more exposed to the agriculture, mining, energy and gas, water supply and waste sectors are more vulnerable to transition and to the physical risks faced by their businesses. client companies. But that does not mean that future responses from banks will see them all move away from the sectors most exposed to climate risks. Indeed, banks can play an important role in financing the transition of companies to more sustainable business models.

Banks can play an important role in financing the transition to more sustainable business models

Exposure to climate risks offers good opportunities for banks to support businesses, especially considering that the adjustment process will be expensive and, of course, it will need financing. Banks may well be able to increase the size of their “environmentally sustainable” loan portfolios under taxonomic regulations. This, in turn, could be favorable for the issuance of green bonds by banks, including those meeting the requirements of the upcoming European regulations on green bonds.

The ECB also concludes that large significant institutions (SIs) are slightly more exposed to climate risk than less significant institutions (LSIs). The central bank estimates, for example, that LSIs have around 50% exposure to low transition, low physical risk companies, while ISs have only around 40% exposure to these low climate risk companies. . Conversely, IS are more exposed to companies that present high transition and / or physical risks.

Thus, the fight against climate risk appears even more important for large institutions. Typically, the banking segment is well positioned to resist climate-related risks, but you cannot rule out that banks face increased pressure to further increase their capital buffers in order to mitigate the deterioration of the market. ‘environment. And that could lead them to be heard even more on the subject in the years to come.