EBA/EIOPA/ESMA/ECB: “Fit-for-55” climate scenario analysis

The ESAs and ECB have released the results of the one-off “Fit-For-55” climate scenario analysis. Under the scenarios examined, transition risks alone are unlikely to threaten financial stability, but when transition risks are combined with macroeconomic shocks, they can increase losses for financial institutions and may lead to disruptions.  The analysis calls for a coordinated policy approach to financing the green transition and the need for financial institutions to integrate climate risks into their risk management in a comprehensive and timely manner.