According to the ECB’s supervisory authority, major banks in the euro area are not adequately prepared for climate risks worth billions of euros and urgently need to make improvements. The European Central Bank’s (ECB) first climate stress test revealed that financial institutions are not yet sufficiently incorporating the financial and economic impacts of climate change into their stress test frameworks and internal models. According to the calculations, banks face losses of at least €70 billion as a result of an increase in natural disasters and profound changes in many industries as they transition to a greener economy.
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