Núñez urges global cooperation on escalating climate financial risks
Soledad Núñez, Deputy Governor of the Bank of Spain, emphasized the urgent need for international cooperation to address escalating climate-related financial risks. Speaking at a high-level conference, she highlighted the increasing physical and complex transition risks shaping global economic conditions.
Climate crisis: a present and accelerating force
Ms. Soledad Núñez, Deputy Governor of the Bank of Spain, emphasized that climate change is no longer a distant threat but an accelerating force.
She highlighted a sharp increase in physical risks, with extreme weather events causing remarkable consequences and mounting economic and financial costs.
These impacts translate into growing financial-sector vulnerabilities, including higher credit risk in affected industries, increased insurance liabilities, and fiscal pressures that weaken sovereign creditworthiness.
Transition risks are also becoming more complex, driven by rapidly evolving regulation, technological shifts, and rising expectations for transparency.
Núñez cited the October 2024 DANA in Valencia, Spain, as an example of severe local losses for households and firms, though its aggregate national impact remained limited.
Central banks' mandate in a changing climate
Núñez stressed that central banks and supervisors must ensure the financial system's resilience against climate-related shocks.
This requires deepening understanding of risk propagation and interaction with macroeconomic trends.
Advancing knowledge, data, and analytical tools for climate risk assessment is essential for fulfilling mandates, especially given the interconnected crises of climate change and biodiversity loss.
Reliable, comparable, and granular climate data forms the foundation for rigorous assessment and effective policy responses.
Central banks also have a role in integrating climate considerations into their own portfolio management.
Inaction's cost far exceeds transition
Núñez's speech underscores a critical truth: the financial system's resilience hinges on proactive, collaborative climate action.
The warning from the NGFS, that delaying measures amplifies risks, highlights the urgency for immediate, coordinated efforts.
This implies that while the challenges are vast, the economic imperative for an orderly transition is undeniable.