Sweden's Riksbank published a Climate Report describing how it analyses climate-related risks and incorporates them into its policy work, given the potential impacts on monetary policy and financial stability. The report identifies physical risks from climate events and transition risks linked to measures to reduce emissions, including the risk of a disorderly transition if action is insufficient or delayed. Physical risks cited include drought-related fires and extreme rainfall and flooding, while transition risks may lead to rapid repricing of certain assets. The report notes that these channels can drive relative price changes with spillovers to price and wage formation and, in the worst case, damage confidence in the inflation target; they can also generate financial risks through stranded assets, losses in asset values and reduced insurance availability, which can increase banks’ credit risks and affect financial stability. It also covers climate-related risks in the Riksbank’s asset management and the payments market, and outlines the international cooperation it participates in, including as a member of the Network for Greening the Financial System.

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