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.
However, supervisors do expect continuous progress to be made. Therefore, addressing climate-related risks will continue gaining in importance in banking supervision. This year, we will use the supervisory dialogue to discuss the banks’ self-assessments and plans to meet the supervisory expectations. And next year, the ECB will conduct its supervisory stress test on climate-related risks. Obviously, central banks are not commercial banks.