EU Regulators, ECB Release Climate Stress Test Results Highlighting Transition Risks

The “Fit-for-55” climate stress test, conducted by European Supervisory Authorities and the European Central Bank, reveals that transition risks alone pose limited threats to EU financial stability, with initial losses ranging from 5.2% to 6.7%. However, when combined with macroeconomic shocks, losses could escalate to between 10.9% and 21.5%, especially in sectors like investment funds. The test underscores the importance of coordinated policy action and integrating climate risk into financial strategies to support the green transition and mitigate financial instability. The findings highlight the EU’s commitment to climate neutrality by 2050, urging careful balancing of green investments and financial stability risks. Resources: https://esgnews.com/eu-regulators-ecb-release-climate-stress-test-results-highlighting-transition-risks/