Clearly, it is in every market participant’s interest to properly protect themselves against climaterelated financial risks by adjusting their risk management accordingly. Thus, first and foremost, it’s up to the financial sector to recognise and take into account such risks. Whether and how this is done has a bearing on several of our tasks as a central bank.
In banking supervision, we do not regard climate-related financial risks as a new risk category, but as a driver of classic categories such as credit risk and market risk. We already expect banks to incorporate such risks into their risk management framework appropriately and to back them with adequate capital.