Company: BBVXF
Filing Date: 2025-03-21
Form Type: 6-K
Source: 0000842180-25-000016
Chunk: 286

Company: BANCO BILBAO VIZCAYA ARGENTARIA, S.A.
Filing Date: 2025-03-21
Form: 6-K
Chunk 286
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 first time an additional shock as the result of a transition risk scenario originating in the bursting of a bubble on green assets.

In terms of methodology, progress is being made along two lines of action: the first of these are the efforts being made to incorporate a sectoral layer in the loss projection models, considering the different idiosyncrasies of each sector when subjected to climate scenarios; the second line is the development of a more granular projection, to consider information at the client or asset location level.

Regulatory and supervisory scenarios and stress tests

In early 2024, BBVA took part in the "One-off Fit-for-55" supervisory exercise, whose primary objective was to collect data on credit and market portfolio exposures and transition climate risks associated with the Fit-for-55 package commitments. Additionally, the request for information considers elements relating to the locations of the financed assets, in order to assess the possible physical risks to which the banks' portfolio is exposed.

Finally, information was also requested on the entity's income in various sectors, with the aim of analyzing the dependence of financial entities on the most polluting sectors and evaluating the associated business risk.

This request for information, coordinated by the European Banking Authority (EBA), adds data to the hierarchical projections made by the European Central Bank (ECB). In November 2024, the EBA published a report detailing the results. The report stresses that climate transition risks alone do not pose a threat to the financial stability of the European Union. However, combined with macroeconomic shocks, they can increase losses for financial institutions and cause disruption. It also highlights the importance of proactive management of climate risks and the need for close collaboration between financial institutions and regulators to ensure an orderly transition towards a sustainable economy.

Processes to define, measure and monitor climate change and environmental risks

Article 449 bis CRR - Table (1) l)

Article 449 bis CRR - Template 1, 2, 4 y 5

#### Climate transition risk
Transition risks are those risks associated with the process of adjusting to a low-carbon economy in response to climate change, and which arise from regulatory, market and consumer behavioral changes needed to meet global climate targets. The sectors identified as having the greatest climate risk face a considerable transformation and adaptation challenge that will require, and is already requiring, large investments. They also happen to be the sectors that will require a closer understanding and monitoring of the risks involved.

BBVA has an internal sectoral classification of transition risk, the main purpose of which is