European regulators found there would be only a “limited impact” on the financial system from the EU’s drive to cut carbon emissions by 55 per cent by 2030, even if it caused investors to ditch polluting companies.
The EU’s top financial watchdogs on Tuesday said their first stress test to estimate how the fight against climate change would affect banks, insurers, pension funds and investors concluded it “would not be a concern for financial stability per se during the green transition”.
Over the eight-year horizon of the test, the impact of the EU smoothly achieving its Fit for 55 plan to more than halve emissions over the next six years would result in initial first-round losses for the financial system equal to 3.9 per cent of starting-point exposures.