While the European Banking Authority has published the final draft of Pillar 3 reporting on ESG risks, which includes quantitative reporting of climate change physical risk, most banking institutions still lack reliable climate risk predictive models and relevant data.
According to the European Central Banks, more than 30% of the banking credit portfolio to corporations is exposed to climate risk. About 60 % of banks do not use a robust stress-testing framework and do not include climate risk in their credit risk models, while only 20% list it as a variable in the granting of loans.
