While transition costs may be higher in the short term, they are much lower in the long run than the costs of unrestrained climate change. Indeed, physical risks are the most significant source of climate-related vulnerability.
Without further climate policies, the most vulnerable 10% of banks may see a 30% increase in the average probability of default of their credit portfolios between now and 2050. We will also accelerate the development of new models and tools to incorporate the impacts of climate change and related policies into our regular monitoring of the economy.