Ei saatavilla suomeksi
María J. Nieto
- 21 April 2026
- OCCASIONAL PAPER SERIES - No. 386Details
- Abstract
- This paper studies the effectiveness of risk management, one of the two channels identified by the Network for Greening the Financial System (NGFS, 2024) as those through which the financial system contributes to physical risk adaptation in the European Union (EU). We assess the efficacy of Level 3 prudential regulations in encouraging banks to include physical risk adaptation in their risk management and client engagement strategies. Our analysis adopts a broad perspective, encompassing not only prudential risk management but also, and in our view more importantly, prudential transparency regulation, given the positive leverage that stakeholders can exert to incentivise adaptation efforts. Our findings suggest that banks should consistently integrate physical risk adaptation into their stress tests, transition plans and Pillar III disclosures. Transition plans must address physical hazards, exposure and vulnerability and must set adaptation targets. Adaptation measures should be treated as risk mitigants reflected in losses given default (LGDs), with the severity and consistency of those losses being reflected in transition plans and stress tests.
- JEL Code
- K23 : Law and Economics→Regulation and Business Law→Regulated Industries and Administrative Law
O52 : Economic Development, Technological Change, and Growth→Economywide Country Studies→Europe
Q54 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Climate, Natural Disasters, Global Warming
Q58 : Agricultural and Natural Resource Economics, Environmental and Ecological Economics→Environmental Economics→Government Policy
- 14 March 2025
- OCCASIONAL PAPER SERIES - No. 370Details
- Abstract
- Greenwashing is a generic term used for breaches and misleading claims about the sustainability credentials of various legal provisions, ranging from unfair competition, securities laws infringements and unethical advertising to wrong corporate disclosure. This paper focuses on the latter. Against the background of the significant financial flows needed to finance the transition to meet the objectives of the Paris Agreement and the EU Climate law, the EU corporate sustainability reporting rules integrated in the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), as well as the EU taxonomy constitute an ambitious legislative framework which is aimed at establishing common mandatory European Sustainability Reporting Standards for companies to report comparable and relevant information required by investors and other stakeholders. This framework’s aim is to support companies in the transition to a more sustainable economy and help stakeholders and investors understand the sustainability risks in their investments (and facilitate financial flows for the transition). This framework’s aim is to support companies in the transition to a more sustainable economy and help stakeholders and investors understand the sustainability risks in their investments (and facilitate financial flows for the transition). This will help mitigate greenwashing risks because this framework raises the responsibility for inaccurate disclosure. In addition, accurate data are important for central bank operations because they can ensure that prices and the risk control framework adequately reflect climate physical and transition risks. The success of the regulatory framework will rely heavily on its credible implementation, including penalties, which will help anchor expectations and condition the behaviour of economic agents. […]