A large part of the adjustment will occur within the sectors. How well enterprises within the same sector cope with the new framework will vary. In order to assess the risks posed by the transformation, banks and supervisors therefore need to take a more granular view. This applies, for example, to the impact of climate risks.
A loan to a glass manufacturer, for example, entails different climate risks depending on whether the glass is melted using electricity from renewable sources or using natural gas. Standardised disclosure requirements are therefore important to ensure that credit risk can be robustly assessed and appropriate risk provisions can be made.