Climate risk and sustainable finance: bridging policy, research, and practice

Published 2 April, 2026 Announcement

25 March 2026

Hosted by Banco de España in collaboration with NGFS, CETEx, and the TPI Global Climate Transition Centre.

Purpose

The conference convened central banks, policymakers, academics, and practitioners to exchange best practices and explore emerging research on climate risk and sustainable finance.

As climate related physical and transition risks intensify, central banks are increasingly integrating these risks into policy frameworks.

The programme featured three thematic sessions:

1. Climate Data and Analytical Tools

2. Transition Plans and Adaptation to Physical Risks

3. Greening Central Banks’ Portfolios

Opening remarks from Deputy Governor Soledad Núñez

The event commenced with remarks from Soledad Núñez, Deputy Governor of Banco de España, who stressed the rising urgency of strengthening climate resilience in a complex and interconnected global environment.

Key themes from her intervention included:

Climate change as a present economic reality.
Núñez emphasised that extreme weather events are already imposing significant financial and economic costs, increasing credit risk, insurance liabilities, and fiscal pressures.
The highly uneven, often localised nature of physical risks.
National‑level indicators can obscure severe regional disruptions. As an example, she referenced the 2024 DANA event in Valencia, which created acute localised losses despite limited macroeconomic effects — underscoring the need for granular, location‑specific data.
Resilience and competitiveness as mutually reinforcing.
Building resilience to climate and geopolitical shocks strengthens economies’ long‑term competitiveness.
The critical role of data.
Núñez highlighted the importance of reliable, comparable, and sufficiently granular climate data to support rigorous risk assessments and informed policymaking.
Central banks’ role in leading by example.
Integrating climate considerations into central bank portfolios — in full alignment with mandates — provides a tangible opportunity to support an orderly transition.

Key insights

Across the day, speakers and panelists highlighted several cross‑cutting insights on how central banks, supervisors, and financial institutions can strengthen their approaches to climate‑related risks and support an orderly, competitive transition.

1. Climate data and analytical tools

Better data is foundational for credible climate‑risk assessment. Speakers stressed that the availability of reliable, comparable, and sufficiently granular data remains one of the most important constraints on robust climate‑risk analysis. Improved data is essential for:

-more accurate modelling of physical and transition risks

-enhancing scenario analysis

-understanding how climate risk propagates through financial systems

-supporting forward‑looking, evidence‑based policymaking

Participants also emphasised the need for methodological innovation, including better integration of macro‑financial channels and more systematic treatment of uncertainty. The discussion emphasised how improvements in data collection can support different financial policy makers, including development banks and economic ministries in evidence-based decision-making.

2. Transition plans and adaptation to physical risks

Credible transition plans are essential for both risk management and competitiveness. Transition plans help financial institutions assess exposures, adjust strategies, and identify emerging opportunities — strengthening both resilience and long‑term strategic positioning.

Speakers also highlighted:

-the rising complexity of transition risks amid rapidly evolving regulation, technology, and disclosure expectations

-the need for forward‑looking assessments of physical risk, which is intensifying across regions and sectors

-the importance of targeted, location‑specific adaptation strategies, given the uneven and often highly localised nature of physical climate impacts

Across the session, a shared message emerged: adaptation and mitigation must advance together, and financial institutions require frameworks that support both.

3. Greening central banks’ portfolios

This session — chaired by CETEx Executive Director, Rob Patalano — examined how central banks can integrate climate considerations into their balance‑sheet management in a mandate‑consistent manner.

Key insights included:

-growing momentum among central banks to incorporate climate risk into collateral frameworks, asset purchases, and portfolio allocation

-examples of leading practices from the ECB, Bank of England and Banco de España to incorporate climate risks into monetary and own-use portfolios

– ECB’s introduction of a new measure within the collateral framework to better manage financial risks related to the climate crisis, and implementation considerations

– the importance of transparency, governance, and alignment with institutional mandates

-how portfolio measures can complement (not replace) broader supervisory and monetary policy efforts

-the need to assess both risk‑reduction effects and potential market impacts of greener portfolio strategies

The session underscored the practical steps central banks are taking — and the challenges they face — as they integrate climate considerations into operational frameworks.

4. Conversation between Kevin Stiroh and Frank Elderson, chaired by Soledad Núñez

The conversation emphasised how climate risk management is now firmly embedded in prudential supervision. While approaches differ across jurisdictions, integration into supervisory expectations is now widespread. In the discussion, Kevin Stiroh, Visiting Professor in Practice at LSE, recalled that climate risks amplify traditional prudential categories. Climate change does not create a “new” class of risks — it acts as a driver of established categories such as credit, operational, and market risk. In addition, he emphasised the materiality of climate change risks for financial institutions is amplified by the growing insurance gap. From the ECB perspective, Frank Elderson underlined that transition planning is central to bank strategic positioning. High‑quality transition plans help banks manage risk, signal credibility, and identify new growth opportunities. Risk management and competitiveness reinforce one another, which is a key message for current EU and UK policy discussions.

Cross‑Cutting Messages

Bringing the sessions together, several overarching themes emerged:

Climate risks are no longer just long-term — they are material, accelerating, and unevenly distributed.
Data and analytical capability remain the foundation of effective climate‑risk management.
Transition plans are essential tools for both resilience and strategic competitive advantage.
Central banks can lead by example through climate‑informed portfolio management.
Collaboration — across institutions, sectors, and jurisdictions — is indispensable.

These insights reflect the growing maturity of climate‑risk integration across the global financial system, while also highlighting the analytical and operational challenges that lie ahead.