I also wish to refer briefly to the 2023 Biennial Report on Climate Change Risks for the Financial System, drawn up jointly by the Banco de España, the National Securities Market Commission and the Directorate General of Insurance and Pension Funds, under the aegis of AMCESFI, the Spanish macroprudential authority. This report, which is to be published  24  lhttps://www.bankingsupervision.europa.eu/ecb/pub/pdf/ssm.202212_ECBreport_on_good_practices_for_CST~5392 27e0c1.en.pdf 25  https://carbonaccountingfinancials.com/  shortly, analyses the impact of both physical and transition risks on the financial sector under various scenarios. The provisional results suggest that a disorderly climate transition would have very adverse effects on the banking sector, far greater than those resulting from a more gradual and planned transition,26 in line with the conclusions of the 2022 climate risk stress tests and other analyses undertaken by the NGFS. Before I conclude, I wish to underline the importance of global cooperation. The fact that the EU is currently leading the global debate on sustainable finance is positive, but we need to consider that climate change requires a global effort and that many other institutions, such as the BCBS and the FSB, are also highly committed in their respective areas of competence. As the BIS recently indicated,27 the existence of ever more complex supply chains, with international connections, makes coordination essential, to ensure that firms’ most polluting activities are not transferred to jurisdictions with more lax environmental regulations. Global warming and environmental degradation are global problems and must, therefore, be tackled in a global and coordinated manner.

In this regard, the main challenges facing us all (including the financial sector) when it comes to managing these risks are plain to see. Among others, I would single out a lack of harmonised definitions, ESG data gaps and the ability to measure impacts. With this in mind, I will now address certain key aspects that concern all sectors, and not just the financial sector. Main regulatory initiatives  We authorities, regulators and supervisors have been shaping the regulatory framework for appropriate management of this risk. This is still an ongoing task, but important progress has been made. At the European level, I would highlight the following: first, the EU Taxonomy Regulation,13 which establishes the bases for determining when an investment or economic activity may be considered environmentally sustainable, and lays the groundwork for other European sustainable finance regulations; and second, Directive (EU) 2022/2464 (CSRD)14 on corporate sustainability reporting, published on 14 December 2022, which updates and reinforces the rules on environmental and social reporting by the companies concerned, which are large undertakings (defined as those that meet at least two of the following requisites: balance sheet total over € million, net turnover over € million or average number of employees over 250), along with listed small and mediumsized undertakings.15  13  Regulation (EU) 2020/852  14  https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464  15  Article 19 bis of Directive 2013/34/EU amended by the CSRD.