BDE has published supervisory expectations explaining the way institutions should take into account the risks derived from climate change and environmental deterioration in the business model and strategy, governance, risk management, and disclosure of information to third parties. BDE also published the financial stability report, summarizing the key risks to financial stability in the current environment in Spain. These risks include risks to economic recovery, financial weakness of certain segments of households and firms, low profitability of banks, potential deterioration in solvency, and growing public debt.
BDE specified the following key supervisory expectations to take into account risks derived from climate change and environmental deterioration:
- BDE expects entities to incorporate into their strategy, business model, and risk appetite framework the risks derived from climate change and environmental deterioration that they consider to be material not only in the short term, but also in the long term.
- BDE expects that the board of directors of the entities will be ultimately responsible for integrating the risks derived from climate change and environmental deterioration into the general strategy according to their materiality and for establishing the necessary mechanisms for their review. It also expects the board to incorporate these risks appropriately into the organization of the entity.
- BDE expects entities to consider the risks derived from climate change and environmental deterioration in an integrated manner in their current risk management procedures and to adopt a global approach for their identification, evaluation, monitoring, and mitigation.
- BDE expects entities to progressively explore and deepen the use of scenario analysis and stress exercises, in accordance with their own characteristics, capacities, and specificities and in an evolutionary way. BDE expects entities, within their scope of action, to make an effort to improve the availability and quality of existing data in relation to risks derived from climate change and environmental deterioration.
Keywords: Europe, Spain, Banking, Financial Stability Report, COVID-19, Systemic Risk, Climate Change Risk, ESG, BDE
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous ArticlePRA Updates Q&A on Branch Return Form
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
The Federal Financial Supervisory Authority of Germany (BaFin) proposed to amend the “Capital Investment Conduct And Organization Ordinance” and issued a draft circular on the minimum resolvability requirements for resolution planning.
The European Banking Authority (EBA) proposed guidelines, for the resolution authorities, on the publication of the write-down and conversion and bail-in exchange mechanic, with the comment period ending on September 07, 2022.
The Financial Services Authority of Indonesia (OJK) is strengthening cooperation with the Australian Prudential Regulation Authority (APRA) and the Japanese Financial Services Agency (JFSA)
The European Parliament and the Council published Regulation 2022/868 on European data governance (Data Governance Act).
The European Banking Authority (EBA) published phase 2 of its reporting framework 3.2. The technical package supports the implementation of the updated reporting framework by providing standard specifications