Núñez: Sustainability, geopolitics, and competitiveness reshape prudential framework
Soledad Núñez, Deputy Governor of the Bank of Spain, discussed how sustainability, competitiveness, and geopolitics are reshaping the prudential framework. Speaking at the FINRESP Annual Assembly on March 2, 2026, she emphasized their direct impact on financial system resilience.
Physical risks now undeniable
Climate change is no longer solely an environmental concern but an increasingly economic and financial one, as evidenced by recent data.
Following record-high temperatures in 2024, 2025 was globally the third warmest year ever recorded.
Between 1980 and 2024, the European Union incurred economic losses exceeding €822 billion from extreme climate and weather events, with over a quarter of this total recorded in the last four years.
Average annual climate-related losses have soared from approximately €8 billion in the 1980s to around €45 billion in 2020-2024.
Spain, particularly exposed to water stress and heat waves, faces direct consequences for strategic sectors like agriculture and tourism.
Over 90 percent of banks supervised under the Single Supervisory Mechanism acknowledge material exposure to climate and environmental risks, confirming their relevance to business models.
Prudential tools for a green transition
Sustainability is not a barrier but a driver of competitiveness over the medium to long term, especially in a fragmented geopolitical environment.
An early and orderly energy transition, guided by clear signals, reduces uncertainty and allows for efficient capital reallocation.
This transition is crucial for European and national security, reducing reliance on imported fossil fuels and limiting exposure to supply shocks.
The financial system must channel savings towards productive investment while prudently managing risks within a clear regulatory framework.
Prudential tools, such as climate scenario analysis, are gaining prominence for assessing resilience under different transition paths and the potential materialization of physical risks.
The European Banking Authority's recent guidelines are an important step towards methodological harmonisation and integrating these risks into banking practices.
Prudence demands proactive integration
The speech underscores a critical shift, moving sustainability from a peripheral concern to a core element of financial stability and prudential oversight.
While methodological challenges persist, the imperative for rigorous, data-driven integration of climate risks into banking frameworks is clear.
This proactive approach, supported by international cooperation, is essential for long-term competitiveness and resilience, transcending mere reputational gains.