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Developing climate transition scenarios to manage financial risks
[Élaborer des scénarios de transition climatique pour gérer les risques financiers]

Author

Listed:
  • Thomas Allen
  • Jean Boissinot
  • Laurent Clerc
  • Stéphane Dees

Abstract

The Banque de France and the ACPR have developed an analytical framework to quantify climate transition scenarios and assess the associated financial risks. This type of framework can be used to carry out climate stress test exercises. Its first application for France gives an order of magnitude for the possible adversity of the scenarios published by the Central Banks and Supervisors Network for Greening the Financial System (NGFS). It reveals that, while these scenarios may lead to only moderate macroeconomic impacts by 2050, they will entail major structural transformations, which are a source of financial risks for those financial institutions that are particularly exposed to the most impacted sectors and firms. Under disorderly transition scenarios, certain firms would be significantly more likely to default and the credit risk of the exposed financial institutions would increase. La Banque de France et l’ACPR ont conçu un cadre analytique pour quantifier des scénarios de transition climatique et en évaluer les risques financiers associés. Un tel cadre peut être mobilisé pour réaliser des exercices de stress tests climatiques. Une première application de cette approche à la France donne un ordre de grandeur de l’adversité possible des chocs correspondant aux scénarios publiés par le Réseau des banques centrales et des superviseurs pour le verdissement du système financier (NGFS). Il en ressort que, si ces scénarios conduisent à des impacts macroéconomiques modérés à horizon 2050, ils impliquent des transformations structurelles importantes, sources de risques financiers pour les institutions financières particulièrement exposées aux secteurs et aux entreprises les plus affectés. Certaines entreprises verraient leur probabilité de défaut augmenter significativement dans les scénarios de transition désordonnée et le risque de crédit s’accroitre pour les institutions financières exposées.

Suggested Citation

  • Thomas Allen & Jean Boissinot & Laurent Clerc & Stéphane Dees, 2021. "Developing climate transition scenarios to manage financial risks [Élaborer des scénarios de transition climatique pour gérer les risques financiers]," Bulletin de la Banque de France, Banque de France, issue 237.
    • Handle: RePEc:bfr:bullbf:2021:237:09
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    References listed on IDEAS

    as
    1. Antoine Devulder & Noëmie Lisack, 2020. "Carbon Tax in a Production Network: Propagation and Sectoral Incidence," Working papers 760, Banque de France.
    2. Thomas Allen & Stéphane Dees & Jean Boissinot & Carlos Mateo Caicedo Graciano & Valérie Chouard & Laurent Clerc & Annabelle de Gaye & Antoine Devulder & Sébastien Diot & Noémie Lisack & Fulvio Pegorar, 2020. "Climate-Related Scenarios for Financial Stability Assessment: an Application to France," Working papers 774, Banque de France.
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