Every new beginning is difficult. But, to echo the king in Lewis Carroll’s “Alice in Wonderland”, we have to “Begin at the beginning.” According to a survey conducted by the ECB and the EBA, only a small number of institutions have fully incorporated climate-related risks into their risk management framework already.
In 2019, the stress test conducted by the Bundesbank and BaFin for small and medium-sized banks (less significant institutions, LSIs) yielded a similar result: only one third of the German credit institutions had incorporated climate-related risks into their risk management at least to some degree. Two-thirds did not take them into account at all. Clearly, an ambitious goal cannot be reached overnight.