60% of banks do not have robust climate stress testing frameworks in place

Two-thirds of entity revenues earned from non-financial corporate clients came from greenhouse gas-intensive sectors

Extreme weather events are increasingly repeated, and although many sectors have taken action on the matter, not all have done so. One of them is banking. Around 60% of banks do not have robust climate risk stress testing frameworks and do not have sufficient climate risk data. This is the main conclusion drawn by the Bank of Spain from the climate stress test, but not the only one. In aggregate terms, almost two-thirds of the banks’ revenues earned from non-financial corporate clients came from greenhouse gas-intensive sectors that are also concentrated in a limited number of large counterparties, increasing their exposure to transition risks. “In general, it is observed that the entities are not sufficiently prepared to comply with the reporting requirements on climate and environmental risks,” lamented Mercedes Olano, Director General of Supervision of the Bank of Spain, during a speech on sustainable finance.

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