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1 Introduction
Ladies and gentlemen,
distinguished colleagues,
dear hosts and partners from the Banque de France, the Paris School of Economics and the Toulouse School of Economics,
it is a great pleasure and an honour to open this Research Conference on Climate- and Nature-Related Risks in the Economic and Financial System here in Paris.
We meet at a time when the scientific evidence on climate change and environmental degradation is painting an ever more sobering picture. At the same time, new political realities and challenges have pushed the topic off many policymakers’ agendas.
Both factors increase the expectations placed on the financial sector as a whole. Yet we should be careful about what we ask of central banks and supervisors in this context. The more they move beyond their core mandates – price stability and financial stability – and into areas that are the domain of elected governments and parliaments, the greater the risk that their independence will be called into question.
Our engagement on climate- and nature-related risks is therefore firmly grounded in our mandate: we act where these risks are relevant to price and financial stability, and we are mindful of the boundaries beyond which others must lead. This conference is therefore both timely and necessary.
I would like to structure my remarks today using three main points:
First, the Paris Agreement target of limiting global warming to 1.5 degrees Celsius is now, according to most current models, likely out of reach – and this has profound implications for our economies and financial systems.
In light of this and second, the costs of adaptation are moving further into focus, including their impact on banks’ risk management and on financial stability – which is my second point.
Third, financial risks from environmental damage do not stem from climate change alone. The loss of biodiversity and ecosystem services might also pose financial risks that should be incorporated into risk management and supervisory frameworks.
Let’s start by doing a stock take.
2 The 1.5-degree target: from ambition to reality
When the Paris Agreement entered into force 2016, the goal of limiting global warming to well below 2 degrees Celsius – and pursuing efforts to limit it to 1.5 degrees – was rightly hailed as a historic achievement. It provided a clear, quantitative anchor for climate policy, for corporate strategies and, increasingly, for financial market expectations.
Today, almost a decade later, the scientific consensus is sobering. Most current climate models and scenario analyses indicate that the 1.5-degree target is now virtually unattainable. Based on IPCC methodology[1] and current data, research suggests that the remaining carbon budget will be used up in three years at today’s emission levels.[2]
This is not a cause for resignation. It is a cause for realism and action.
Realism means acknowledging that we are likely to face a world with more frequent and more severe physical impacts of climate change: more heatwaves, more droughts, more floods, more storms, and more gradual but profound changes such as rising sea-levels.
Realism also means recognising that the transition to a low-carbon economy is still indispensable. Every fraction of a degree of warming that we can avoid will reduce human suffering and economic damage. The difference between 1.5 and 2 degrees is substantial; the difference between 2 and 3 degrees is even greater. Mitigation remains essential.
But realism also implies that adaptation – in other words, preparing our economies, our societies and our financial systems for a warmer and more volatile climate – must become the focus of our attention.
For commercial banks, central banks and supervisors, this shift has important implications. It means that we must not only consider transition risks arising from climate policy and technological change, but also the physical risks that will materialise as the climate continues to change – and the adaptation measures that will be required in response.
The logic here is straightforward: the less we succeed in limiting man-made climate change through globally coordinated action, the greater and more material the physical risks become – for our economies, for financial stability, and for the institutions responsible for safeguarding it.
3 Adaptation costs and the financial system
If the 1.5‑degree target is now, in most models, virtually out of reach, the question is no longer whether we will have to adapt, but by how much, how fast – and at what cost. This adaptation will also affect the financial sector.
The IPCC defines climate adaptation as “the adjustment of natural or human systems in response to actual or expected climate change.” Effective adaptation can limit damage, support resilience and reduce economic spillovers – but there are always trade‑offs between adaptation costs, benefits and the residual risks that remain.
These trade‑offs are no longer abstract. Companies are already implementing concrete adaptation measures. Examples of these include flood protection for transformer stations in the energy sector, the reinforcement of network infrastructure in telecommunications, and insurance and retrocession solutions to hedge against loss peaks[3]. Such measures illustrate both the necessity and the complexity of adaptation.
At the same time, they reveal several dimensions of adaptation risk that are highly relevant for the financial system.
Some firms classify extreme weather events as “likely” and quantify potential losses as being in the hundreds of millions of euro, in some cases – yet they have still only undertaken limited protective investment measures. They consciously accept the remaining risks of outages and damages.
For banks, this means that even where risks are recognised, they may not be fully mitigated, and significant residual risks remain on bank’s balance sheets.
Similarly, insurance cover can provide short‑term relief, but it may prove deceptive if reinsurers raise risk premiums sharply or restrict coverage. Some firms are already reacting – for example, by modelling climate risks more intensively or by setting up their own insurance companies, called captives, to stabilise premiums. The sustainability of current insurance solutions for banks as a risk mitigant over the medium term is questioned. Corporate risk assessments that focus on individual sites may not fully account for the broad impact of climate shocks on employees, suppliers, and shared infrastructure, leading to system-wide stress. Future extreme climate events may not be adequately recognized under accounting standards, creating governance gaps in adaptation investment. The underfunding of adaptation financing compared to mitigation poses challenges for low-income countries and the global economy. Private investment in adaptation efforts remains insufficient, highlighting the need for the financial sector to play a crucial role in facilitating financing through innovative instruments. Central banks and supervisory authorities must address the implications of inadequate adaptation efforts for price stability and financial stability. Banks must enhance their understanding of physical climate risks and effectiveness of adaptation measures while also supporting adaptation financing. Adaptation and innovation are interconnected, presenting significant investment opportunities for banks and financial institutions. The financial sector can enable green innovation through novel instruments and financing structures. Regulatory and supervisory authorities need to improve metrics and tools for measuring and disclosing adaptation efforts. Bridging the gap between the scale of the climate adaptation challenge and current practices is essential for ensuring financial system resilience. Additionally, the broader environmental challenges related to biodiversity loss and ecosystem degradation have significant economic implications that must be addressed. Ecosystem services that support economic activity need to be valued and protected to avoid negative economic consequences. Deforestation poses a threat by increasing the risk of floods and landslides, causing damage to infrastructure and property. The decline of wetlands can diminish natural flood protection and water filtration, leading to the need for costly storm surge barriers and water purification systems. Furthermore, overfishing and coral reef degradation can harm fisheries and tourism industries. (2024), Warum müssen wir die Anpassung des Klimas stärken? Szenarien und finanzielle Verteidigungslinien, EZB Arbeitspapier Nr. 3005, Europäische Zentralbank.
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1 Einleitung
Damen und Herren,
geschätzte Kollegen,
liebe Gastgeber und Partner der Banque de France, der Paris School of Economics und der Toulouse School of Economics,
es ist mir eine große Freude und Ehre, diese Forschungskonferenz zu klima- und naturbezogenen Risiken im Wirtschafts- und Finanzsystem hier in Paris zu eröffnen.
Wir treffen uns zu einer Zeit, in der die wissenschaftlichen Erkenntnisse über den Klimawandel und die Umweltzerstörung ein immer ernüchternderes Bild zeichnen. Gleichzeitig haben neue politische Realitäten und Herausforderungen das Thema von vielen politischen Agenden verdrängt.
Beide Faktoren erhöhen die Erwartungen an den Finanzsektor insgesamt. Dennoch sollten wir vorsichtig sein, was wir von Zentralbanken und Aufsichtsbehörden in diesem Kontext verlangen. Je mehr sie über ihre Kernmandate hinausgehen – Preisstabilität und Finanzstabilität – und in Bereiche vordringen, die in den Zuständigkeitsbereich gewählter Regierungen und Parlamente fallen, desto größer ist das Risiko, dass ihre Unabhängigkeit in Frage gestellt wird.
Unser Engagement für klima- und naturbezogene Risiken ist daher fest in unserem Auftrag verankert: Wir handeln dort, wo diese Risiken für Preis- und Finanzstabilität relevant sind, und wir achten auf die Grenzen, jenseits derer andere führen müssen. Diese Konferenz ist daher sowohl zeitgemäß als auch notwendig.
Ich möchte meine heutigen Bemerkungen anhand von drei Hauptpunkten strukturieren:
Erstens ist das Ziel des Pariser Abkommens, die globale Erwärmung auf 1,5 Grad Celsius zu begrenzen, nach den meisten aktuellen Modellen jetzt wahrscheinlich außer Reichweite – und das hat tiefgreifende Auswirkungen auf unsere Wirtschaften und Finanzsysteme.
In Anbetracht dessen und zweitens rücken die Anpassungskosten weiter in den Fokus, einschließlich ihrer Auswirkungen auf das Risikomanagement von Banken und auf die Finanzstabilität – das ist mein zweiter Punkt.
Drittens resultieren finanzielle Risiken aus Umweltschäden nicht nur aus dem Klimawandel. Der Verlust von Biodiversität und Ökosystemdienstleistungen könnte auch finanzielle Risiken darstellen, die in Risikomanagement- und Aufsichtsrahmen integriert werden sollten.
Lassen Sie uns mit einer Bestandsaufnahme beginnen.
2 Das 1,5-Grad-Ziel: von der Ambition zur Realität
Als das Pariser Abkommen 2016 in Kraft trat, wurde das Ziel, die globale Erwärmung auf deutlich unter 2 Grad Celsius zu begrenzen – und Anstrengungen zu unternehmen, sie auf 1,5 Grad zu begrenzen – zu Recht als historischer Erfolg gefeiert. Es lieferte einen klaren, quantitativen Anker für die Klimapolitik, für Unternehmensstrategien und zunehmend auch für die Erwartungen der Finanzmärkte.
Heute, fast ein Jahrzehnt später, ist der wissenschaftliche Konsens ernüchternd. Die meisten aktuellen Klimamodelle und Szenarioanalysen deuten darauf hin, dass das 1,5-Grad-Ziel jetzt praktisch unerreichbar ist. Basierend auf IPCC Methode[1] und aktuellen Daten legen Forschungen nahe, dass das verbleibende Kohlenstoffbudget in drei Jahren bei den heutigen Emissionsniveaus aufgebraucht sein wird.[2]
Dies ist kein Grund zur Resignation. Es ist ein Anlass für Realismus und Handeln.
Realismus bedeutet anzuerkennen, dass wir wahrscheinlich einer Welt gegenüberstehen werden, die häufigere und schwerwiegendere physische Auswirkungen des Klimawandels aufweist: mehr Hitzewellen, mehr Dürren, mehr Überschwemmungen, mehr Stürme und langsamere, aber tiefgreifende Veränderungen wie steigende Meeresspiegel.
Realismus bedeutet auch anzuerkennen, dass der Übergang zu einer kohlenstoffarmen Wirtschaft nach wie vor unerlässlich ist. Jedes Grad weniger Erwärmung, das wir vermeiden können, wird menschliches Leiden und wirtschaftlichen Schaden reduzieren. Der Unterschied zwischen 1,5 und 2 Grad ist erheblich; der Unterschied zwischen 2 und 3 Grad ist noch größer. Die Minderung bleibt unerlässlich.
Aber Realismus bedeutet auch, dass die Anpassung – also die Vorbereitung unserer Wirtschaften, unserer Gesellschaften und unserer Finanzsysteme auf ein wärmeres und volatileres Klima – in den Mittelpunkt unserer Aufmerksamkeit rücken muss.
Für Geschäftsbanken, Zentralbanken und Aufsichtsbehörden hat dieser Wandel wichtige Implikationen. Es bedeutet, dass wir nicht nur die Übergangsrisiken im Zusammenhang mit der Klimapolitik und technologischen Veränderungen berücksichtigen müssen, sondern auch die physischen Risiken, die sich zeigen werden, während sich das Klima weiter verändert – und die Anpassungsmaßnahmen, die als Reaktion erforderlich sein werden.
Die Logik hierbei ist einfach: Je weniger es uns gelingt, den vom Menschen verursachten Klimawandel durch global koordiniertes Handeln zu begrenzen, desto größer und materieller werden die physischen Risiken – für unsere Wirtschaften, für die Finanzstabilität und für die Institutionen, die für deren Sicherung verantwortlich sind.
3 Anpassungskosten und das Finanzsystem
Wenn das 1,5‑Grad-Ziel jetzt in den meisten Modellen praktisch unerreichbar ist, lautet die Frage nicht mehr, ob wir uns anpassen müssen, sondern um wie viel, wie schnell – und zu welchen Kosten. Diese Anpassung wird auch den Finanzsektor betreffen.
Der IPCC definiert Klimaanpassung als «die Anpassung natürlicher oder menschlicher Systeme als Reaktion auf tatsächliche oder erwartete Klimaveränderungen.» Eine effektive Anpassung kann Schäden begrenzen, die Widerstandsfähigkeit unterstützen und wirtschaftliche Folgeerscheinungen reduzieren – aber es gibt immer Abwägungen zwischen Anpassungskosten, Nutzen und den verbleibenden Risiken.
Diese Abwägungen sind nicht mehr abstrakt. Unternehmen setzen bereits konkrete Anpassungsmaßnahmen um. Beispiele hierfür sind der Hochwasserschutz für Transformatorstationen im Energiesektor, die Verstärkung der Netzinfrastruktur in der Telekommunikation und Versicherungs- und Rückversicherungslösungen zur Absicherung gegen Verlustspitzen[3]. The measures demonstrate the essential nature and intricate complexity of adaptation. They also highlight various dimensions of adaptation risk that are pertinent to the financial system. Some firms acknowledge extreme weather events as «likely» and estimate potential losses in the hundreds of millions of euros, yet they have only implemented limited protective measures. This conscious acceptance of remaining risks poses challenges for banks, as recognized risks may not be fully mitigated, leaving significant residual risks on their balance sheets.
Insurance coverage can offer temporary relief, but it may become misleading if reinsurers increase risk premiums or limit coverage. Companies are responding by intensifying climate risk modeling or establishing their own insurance companies to stabilize premiums. This raises concerns about the sustainability of current insurance solutions for banks over the medium term.
Many corporate risk assessments focus on individual sites, but climate shocks extend beyond factory gates, affecting employees, suppliers, and shared infrastructure. The increase in frequency and correlation of losses from repeated events challenges conventional risk assumptions, turning isolated risks into system-wide stress.
In addition, future extreme climate events cannot be provisioned under accounting standards unless there is a concrete obligation and a probability of occurrence exceeding 50% by the reporting date. Failure to establish dedicated investment programs for adaptation may create governance gaps between recognized internal risks and actual financial buffers.
Adaptation is both a cost and a necessity from a macroeconomic perspective. Low-income countries have already experienced a 1% reduction in GDP annually due to extreme weather events linked to climate change. The European Central Bank notes that adaptation financing is significantly underfunded compared to mitigation efforts, with only 4% of global climate financing allocated to adaptation.
Private investment in adaptation remains inadequate, and financial institutions can play a crucial role in facilitating private adaptation financing through instruments such as blended finance, catastrophe bonds, and green bonds. The failure to act on adaptation has direct implications for price stability and financial stability, emphasizing the importance of addressing physical climate risks at a granular level and financing adaptation projects effectively. Only by recognizing the importance of nature and ecosystem services can the financial system maintain resilience in a world where adaptation is no longer a choice, but a necessity. Señoras y señores, distinguidos colegas, estimados anfitriones y socios del Banque de France, la Escuela de Economía de París y la Escuela de Economía de Toulouse, es un gran placer y un honor inaugurar esta Conferencia de Investigación sobre los Riesgos Relacionados con el Clima y la Naturaleza en el Sistema Económico y Financiero aquí en París.
Nos reunimos en un momento en el que la evidencia científica sobre el cambio climático y la degradación ambiental está pintando un panorama cada vez más sobrio. Al mismo tiempo, nuevas realidades y desafíos políticos han sacado el tema de la agenda de muchos tomadores de decisiones.
Ambos factores aumentan las expectativas depositadas en el sector financiero en su conjunto. Sin embargo, debemos ser cuidadosos con lo que pedimos a los bancos centrales y supervisores en este contexto. Cuanto más se alejen de sus mandatos centrales -estabilidad de precios y estabilidad financiera- y se adentren en áreas que son competencia de gobiernos y parlamentos electos, mayor será el riesgo de que se ponga en duda su independencia.
Nuestro compromiso con los riesgos relacionados con el clima y la naturaleza está firmemente arraigado en nuestro mandato: actuamos donde estos riesgos son relevantes para la estabilidad de precios y financiera, y somos conscientes de los límites más allá de los cuales otros deben liderar. Por lo tanto, esta conferencia es tanto oportuna como necesaria.
Me gustaría estructurar mis comentarios de hoy utilizando tres puntos principales:
Primero, el objetivo del Acuerdo de París de limitar el calentamiento global a 1,5 grados Celsius es ahora, según la mayoría de los modelos actuales, probablemente inalcanzable, y esto tiene profundas implicaciones para nuestras economías y sistemas financieros.
A la luz de esto y en segundo lugar, los costos de adaptación están cobrando mayor relevancia, incluido su impacto en la gestión del riesgo de los bancos y en la estabilidad financiera.
En tercer lugar, los riesgos financieros derivados del daño ambiental no provienen únicamente del cambio climático. La pérdida de biodiversidad y servicios ecosistémicos también podrían plantear riesgos financieros que deberían incorporarse en los marcos de gestión del riesgo y supervisión.
Comencemos haciendo un balance.
Cuando el Acuerdo de París entró en vigor en 2016, el objetivo de limitar el calentamiento global a menos de 2 grados Celsius y esforzarse por limitarlo a 1,5 grados fue acertadamente celebrado como un logro histórico. Proporcionó un ancla clara y cuantitativa para la política climática, las estrategias corporativas y, cada vez más, las expectativas del mercado financiero.
Hoy, casi una década después, el consenso científico es sobrio. La mayoría de los modelos climáticos actuales y los análisis de escenarios indican que el objetivo de 1,5 grados es virtualmente inalcanzable. Basado en la metodología del IPCC y los datos actuales, la investigación sugiere que el presupuesto de carbono restante se agotará en tres años a los niveles de emisión actuales.
Esto no es motivo de resignación. Es motivo de realismo y acción.
El realismo implica reconocer que es probable que enfrentemos un mundo con impactos físicos del cambio climático más frecuentes y más severos: más olas de calor, más sequías, más inundaciones, más tormentas y cambios más graduales pero profundos como el aumento del nivel del mar.
El realismo también implica reconocer que la transición a una economía baja en carbono sigue siendo indispensable. Cada fracción de grado de calentamiento que podamos evitar reducirá el sufrimiento humano y el daño económico. La diferencia entre 1,5 y 2 grados es sustancial; la diferencia entre 2 y 3 grados es aún mayor. La mitigación sigue siendo esencial.
Pero el realismo también implica que la adaptación, es decir, preparar nuestras economías, nuestras sociedades y nuestros sistemas financieros para un clima más cálido y volátil, debe convertirse en el centro de nuestra atención.
Para los bancos comerciales, los bancos centrales y los supervisores, este cambio tiene importantes implicaciones. This implies that we need to not only take into account the risks associated with transitioning due to climate policies and technological advancements, but also the physical risks that will arise as the climate changes, and the necessary adaptation measures that will need to be implemented in response.
The reasoning is simple: the less successful we are in limiting human-induced climate change through global cooperation, the more significant and tangible the physical risks become for our economies, financial stability, and the institutions responsible for ensuring it.
If achieving the 1.5-degree target is now nearly impossible according to most models, the focus shifts to not if we need to adapt, but by how much, how quickly, and at what cost. This adaptation will impact the financial sector as well.
The IPCC defines climate adaptation as adjusting natural or human systems in response to actual or expected climate change. Effective adaptation can minimize damage, enhance resilience, and reduce economic spillovers, but there are always trade-offs between adaptation costs, benefits, and residual risks.
These trade-offs are becoming more concrete as companies are already implementing specific adaptation measures, such as flood protection for energy infrastructure, strengthening network infrastructure in telecommunications, and insurance solutions to mitigate loss peaks. These examples highlight the necessity and complexity of adaptation.
Furthermore, adaptation risks have several dimensions that are crucial for the financial system. Companies may classify extreme weather events as likely with potential losses in the millions, yet they may have only taken limited protective measures. This leaves significant residual risks on banks’ balance sheets.
Insurance coverage can offer short-term relief, but it may not be sustainable if reinsurers increase risk premiums or limit coverage. Some companies are responding by intensifying climate risk modeling or establishing their own insurance companies. For banks, this raises questions about the long-term sustainability of current insurance solutions as risk mitigants.
Moreover, many corporate risk assessments focus on individual sites, but climate shocks impact employees, suppliers, and shared infrastructure. This increases the frequency and correlation of losses, challenging conventional risk assumptions and turning isolated risks into system-wide stresses.
In addition, future extreme climate events cannot simply be accounted for under standard provisions, as they require a concrete obligation and a probability of occurrence exceeding 50 percent. If companies do not establish dedicated investment programs for adaptation, governance gaps can arise between recognized internal risks and actual financial buffers, impacting banks’ balance sheets and client assessments.
From a macroeconomic perspective, adaptation is both a cost and a necessity, particularly for low-income countries facing climate-related extreme weather events that have already impacted GDP. However, adaptation financing remains underfunded compared to mitigation efforts, with private investment insufficient. The financial sector can play a critical role in facilitating private adaptation financing through instruments like blended finance and green bonds.
Whether adaptation investments are made sufficiently will be crucial for central banks and supervisory authorities, given the economy’s resilience depends on addressing physical risks from climate change. Research shows a significant portion of euro area inflation volatility is linked to climate-related harvest shocks.
Despite this, the financial sector is not adequately prepared for adaptation. A recent study found that the majority of the world’s largest commercial banks do not adequately address adaptation risks. This lack of action has direct implications for price stability and financial stability.
To manage these risks, banks must understand physical climate risks and the effectiveness of adaptation measures at a detailed level, as well as play a role in financing adaptation projects. This requires robust metrics, tools, and disclosures to prevent mispricing and misallocation of capital. Recognizing that adaptation and innovation go hand in hand, banks must also be prepared to meet the growing demand for new technologies, business models, and financial products driven by climate change. The shift towards a more resilient economy, encompassing climate-resilient infrastructure and drought-resistant agriculture, necessitates significant investment in innovation. Financial institutions stand to gain an estimated 44 billion US Dollars annually through 2030 by financing this transition. Novel financial instruments, such as sustainability-linked loans and climate-tech financing, can help bridge the funding gap and provide a competitive edge to institutions that embrace them early.
Regulatory bodies must enhance metrics and tools for measuring and disclosing adaptation efforts, while also evaluating the need for adjustments to supervisory frameworks. The financial sector must move beyond merely absorbing climate shocks to actively financing solutions. The Deutsche Bundesbank is collaborating with European and international partners to integrate climate-related risks into their analytical and supervisory work.
Furthermore, the financial sector must also address nature and ecosystem services challenges. Ecosystem services underpin economic activities, and their degradation can lead to significant economic and financial risks. Banks should factor in ecosystem services in their risk assessments and strategic planning to mitigate these risks effectively. A recent analysis by the Deutsche Bundesbank revealed a high dependency on water-based ecosystem services among German banks, highlighting the critical role of water in economic activities.
As banks continue to explore ESG risks and their impact on various risk categories, they should also assess their reliance on ecosystem services and develop strategies to manage biodiversity-related risks. The urgency and scale of the challenges we face underscore the need for proactive adaptation to a warming world. The costs of adapting to climate change and the risks of not adapting enough will have a greater impact on our economies and financial systems. For banks and regulators, this means managing risks related to transitioning to a low-carbon economy and dealing with the physical effects of climate change, as well as recognizing that environmental risks extend beyond just climate change to include biodiversity loss and ecosystem services.
It is important for central banks and supervisors to stay within their mandates to avoid undermining their effectiveness. While our commitment to addressing ESG risks is strong, it must be balanced with our responsibility for maintaining price and financial stability.
In addition to managing risks, supervisors must also acknowledge that banks play a role in financing solutions and directing capital toward innovation and investment for a more resilient and sustainable economy. Banks that embrace this dual role will be better equipped to face future challenges.
It is crucial to broaden our focus to include nature-related risks and the loss of ecosystem services, which are closely linked to climate risks. These factors need to be integrated into risk management and supervisory frameworks.
This cannot be achieved by central banks and supervisors alone; it requires the involvement of the entire financial sector, policymakers, businesses, civil society, and the research community. Conferences like this one play a key role in advancing our understanding of these risks and developing effective responses.
We thank our partners and participants for their dedication to this important topic and wish everyone a successful conference. Please rewrite this sentence. Please rewrite this sentence.
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