Green transition and risks. Even banks can’t escape them. In a joint report by the Bank of Spain, the National Securities Market Commission CNMV and the Directorate General of Insurance and Pension Funds a messy climate transition would bring a very negative impact on the banking sector and be far greater than a gradual and anticipated shift.
During a Barcelona gathering organized by XI, Margarita Delgado Deputy Governor of the Bank of Spain highlighted the central role of the financial sector in the transition. She noted that the risk map from the World Economic Forum presented at Davos was included in the assessment and explained that the information shared was a preview of results that will be published soon. Delgado stressed that the preview covers a temporary snapshot and carries forward into a larger, forthcoming report.
This biennial analysis, carried out under the Macro-Provisional Authority Financial Stability Council Amcesfi, examines climate risk to the 2023 financial system. The document explores how both physical and transition risks could affect financial activities under different scenarios, helping institutions prepare and adapt.
The European Central Bank ECB has stepped up its supervisory focus in this area. In its latest review, it found that over eighty percent of institutions acknowledge a meaningful impact of climate risks on their risk profiles and are taking steps to establish a basic framework for management. This signals a growing awareness and a move toward standardized governance across the euro area.
On the topic of green finance Delgado reported that global green bond issuance last year reached substantial levels, with volumes approaching eight hundred forty-one billion dollars. There was notable activity tied to social and sustainable financing as well, though the growth rate showed a decline from the previous year. In measuring the full spectrum of climate finance, sustainable loans and other instruments remained part of the picture, and Spain reported a notable advance in bank financing for 2022 driven by lending activity rather than bond issuance. This shift underscores the distinctive dynamics of European capital markets where banks play a key role compared with more fragmented markets in other regions.
Teresa Ribera, the third vice president and minister of ecological transition of Spain, spoke about the European Union’s role in the same symposium. The EU is seeking concrete ideas and proposals to promote a robust European green industry. This aims to sustain competitiveness in a landscape where green subsidies announced by the United States add urgency to Europe’s strategic plans. Ribera urged the EU not to miss the moment in this new race toward green leadership.
Ribera emphasized that the world faces not only a climate debate but also a battle over industrial technology. The European Commission is actively debating measures to accelerate the development of green technologies across Europe, with a focus on closing a significant competitiveness gap with the United States. Energy pricing remains a dominant factor driving this competition, and policymakers are weighing how to support innovation while ensuring energy security.
Given the need for rapid progress, there was discussion about updating the European Union electricity market framework. The aim is to enable faster adoption of energy packages and to secure sustainable access to raw materials. Spain will assume the EU presidency in the first half of 2023, beginning July 1, a role that adds importance to its policy agenda during that period. The focus remains on making the transition both effective and resilient while balancing market dynamics and climate goals.