Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246212 
Year of Publication: 
2021
Series/Report no.: 
ECB Occasional Paper No. 281
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
Climate change is one of the greatest challenges facing humankind this century. If left unchecked, it is likely to result in more frequent and severe climatic events, with the potential to cause substantial disruption to our economies, businesses and livelihoods in the coming decades. Yet the associated risks remain poorly understood, as climate shocks differ from the financial shocks observed during previous crises. This paper describes the ECB's economy-wide climate stress test, which has been developed to assess the resilience of non-financial corporates (NFCs) and euro area banks to climate risks, under various assumptions in terms of future climate policies. This stress test comprises three main pillars: (i) climate-specific scenarios to project climate and macroeconomic conditions over the next 30 years; (ii) a comprehensive dataset that combines climate and financial information for millions of companies worldwide and approximately 1,600 consolidated euro area banks; (iii) a novel set of climate-specific models to capture the direct and indirect transmission channels of climate risk drivers for firms and banks.
Subjects: 
climate stress-test
transition risk
physical risk
climate scenarios
JEL: 
C53
C55
G21
G38
Q54
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4835-7
Document Type: 
Research Report

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