Climate change is increasingly impacting our economies and the shifts in our climate have potentially profound implications for the financial sector, i.e. for the EIB.
For six months, a team of Sciences Po Masters’ students working under the framework of a capstone project assessed EIB portfolio looking at the three broad channels through which climate change can affect financial stability: physical risks, liability risks and transition risks -changes in policy or technology which could prompt a reassessment of the value of a large range of assets.Their analysis focused on three specific sectors: energy, transport and industry.
Their conclusion? Today, these risk factors are largely covered during the project appraisal cycle and the credit risk assessment. However, the Bank will need to deepen its analysis to better understand its exposure for operations signed and disbursed in previous years when the perceived risks from climate change were not so prominent, or for climate related risks that may affect EIB guarantors, collateral and securities.
This was the second of two capstone projects undertaken in 2016-2017 under the agreement signed between the EIB Group and Sciences Po, France’s leading university for social sciences.
Click here for presentation