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 three European Supervisory Authorities (ESAs) issued a letter to inform about delay in the Sustainable Finance Disclosure Regulation (SFDR) mandate, along with a Call for Evidence on greenwashing practices.
The International Sustainability Standards Board (ISSB) of the IFRS Foundations made several announcements at COP27 and with respect to its work on the sustainability standards.
The International Organization for Securities Commissions (IOSCO), at COP27, outlined the regulatory priorities for sustainability disclosures, mitigation of greenwashing, and promotion of integrity in carbon markets.
The European Banking Authority (EBA) issued a statement in the context of COP27, clarified the operationalization of intermediate EU parent undertakings (IPUs) of third-country groups
The Office of the Superintendent of Financial Institutions (OSFI) published an annual report on its activities, a report on forward-looking work.
The Australian Prudential Regulation Authority (APRA) finalized amendments to the capital framework, announced a review of the prudential framework for groups.
The Bank for International Settlements (BIS) Innovation Hubs and several central banks are working together on various central bank digital currency (CBDC) pilots.
The Financial Accounting Standards Board (FASB) is seeking comments, until November 03, 2022, on the proposed technical and other conforming improvements for the 2023 GAAP Financial Reporting Taxonomy.
The European Central Bank (ECB) published the results of its thematic review, which shows that banks are still far from adequately managing climate and environmental risks.
Among its recent publications, the European Banking Authority (EBA) published the final standards and guidelines on interest rate risk arising from non-trading book activities (IRRBB)