The Central Bank of Russia has launched a consultation on draft recommendations for banks to stress test transition climate risks linked to the global shift away from fossil fuels. The proposals are designed to help banks assess credit portfolio resilience and identify exposed borrowers and sectors. The Bank plans to provide macro-scenarios covering a baseline with no new climate measures and a stress case with tighter policies and a faster hydrocarbon phase-out.
Policy & regulationGuidance & interpretationClimate risk and sustainable financeStress testing
The Central Bank of Russia has opened a public consultation on draft recommendations for banks to stress test risks arising from the global transition from fossil fuels to renewable energy. The proposed framework is intended to help banks assess how resilient their credit portfolios are to transition climate risks, identify the most exposed borrowers and sectors, and account for possible effects such as new trade barriers to Russian exports.
The Bank plans to develop macro-scenarios and provide them to banks for this exercise. Under the baseline scenario, no new climate policy measures are assumed and technological innovation is integrated slowly. The stress scenario assumes that countries progressively tighten climate policy and that this is accompanied by a faster worldwide phase-out of hydrocarbons.
The Central Bank of Russia's survey reveals limited compliance with its climate-risk recommendations among financial institutions, with banks more engaged than non-governmental pension funds and insurance companies. The central bank plans to enhance methodologies for climate risk management and stress testing, urging financial institutions to…