21  https://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.thematicreviewcerreport112022~2eb322a79c.en.pdf  22  lhttps://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.climate_stress_test_report.20220708~2e3cc0999f.en.p df 23  lhttps://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.thematicreviewcercompendiumgoodpractices112022~ b474fb8ed0.en.pdf?8330f3208649c4b24d2a6f4204447f9f  Stress tests  In December last year the ECB also published a report24 with conclusions on the good practices identified during the stress test carried out in the summer. This first climate risk stress testing exercise aimed to ascertain the extent to which institutions have developed climate risk analysis frameworks, encourage greater awareness of the importance of this risk and identify best practices and the main deficiencies in the banking sector. The ECB emphasises that data compilation is a challenge, especially as regards greenhouse gases and energy efficiency. Some banks have solved this issue in part by independently developing indicators to identify firms that have greater exposure to transition risks, or by using proxies in line with the standards developed by the Partnership for Carbon Accounting Financials (PCAF).25 In general, good practices are observed in each of the areas analysed: stress testing framework and scenarios; use of data and energy performance certificates; and, lastly, modelling methodologies. It is noteworthy that these good practices were detected at banks both large and small, across a variety of geographical locations and with a variety of business models. In other words, they can and should be extrapolated to all banks. Correct climate risk management and incorporation of sustainability-related factors is not a question of size, although clearly the principle of proportionality must be taken into account.

The Banco de España was one of the first to join (in April 2018); it is a Plenary member and plays an active role in all of the workstreams. From my personal experience I can confirm that it is a forum for global  6  Banco de México, Bank of England, Banque de France and Autorité de Contrôle Prudentiel et de Résolution, De Nederlandsche Bank, Deutsche Bundesbank, Finansinspektionen (Sweden), the Monetary Authority of Singapore and the People’s Bank of China. cooperation characterised by continuous learning, drawing on both the experience of the members themselves and the analytical work performed by the different workstreams. Meanwhile, the Eurosystem, the European Central Bank (ECB) and the Banco de España have also been devoting considerably more resources to better understanding the implications of climate change. Notably, this includes: i) ii) iii)  the incorporation of climate-related issues within the ECB’s monetary policy framework. the integration of sustainable and responsible investment practices into own portfolio management. the assessment of climate risks in microprudential supervision. Monetary policy First, with respect to our monetary policy mandate, in 2021 the ECB’s Governing Council presented an action plan to include climate change considerations in its monetary policy strategy. The measures aim to reduce financial risk related to climate change on the Eurosystem’s balance sheet. Moreover, they are designed in accordance with the Eurosystem’s primary objective of maintaining price stability, and the secondary objective of supporting the green transition of the economy in line with the European Union’s climate neutrality objectives.