Included alongside the two already mentioned are failure of climate-change adaptation and biodiversity loss.1 Thus, the transition towards a carbon-neutral economy is necessary, calling for the mobilisation of financial resources to facilitate the process. Funding the fight against climate change is one of the goals of the 2015 Paris Agreement, which set a target of $ billion a year to be mobilised by the developed countries starting in 2020, with a view to increasing this amount before 2025. In terms of public investment, the Sustainable Europe Investment Plan, which forms part of the European Green Deal, envisages the mobilisation of at least € trillion in sustainable investments through the EU budget over the coming decade, to advance towards the goal of ensuring a carbon-neutral economy by 2050. 1  See WEF (2023). The Global Risks Report 2023 18th Edition, January. In the EU's recovery plan Next Generation EU (NGEU), 37% of the € billion Recovery and Resilience Facility is being spent on climate-related objectives. Moreover, an overall climate target of 30% applies to the total amount of expenditure from the long-term EU budget for 2021-2027. The European Commission will issue green bonds to finance part of the NGEU funds. According to the first report on the allocation of funds,2 823 projects will be financed for almost € billion, around one-third of the total NGEU funds. Clean transport and infrastructure will be the biggest recipients of these funds (accounting for 55.6%), followed by energy efficiency (33.4%).

The EBA is also working on guidelines on the transition plans to be drawn up by credit institutions. 17  lhttps://www.bde.es/f/webbde/INF/MenuVertical/Supervision/Normativa_y_criterios/Recomendaciones_BdE/Banco_ de_Espana_supervisory_expectations_relating_to_the_risks_posed_by_climate_change_and_environmental_degradati on.pdf 18  https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr201127~5642b6e68d.en.html  19  https://eur-lex.europa.eu/eli/reg_impl/2022/2453/oj  20  https://www.eba.europa.eu/eba-publishes-its-roadmap-sustainable-finance  In recent years, supervisory efforts in this field have also stepped up. For example, with the ECB thematic review,21 carried out in 2022, on compliance with supervisory expectations and the climate risk stress test22 whose results were published in the summer. These exercises showed that although banks have made progress in including these risks in their day-to-day management, there is still much to be done. I will now briefly mention the key aspects of these two exercises. Thematic review  The thematic review23 shows, among other aspects, that more than 80% of institutions recognise that climate risks have a material impact on their risk profile and that, in consequence, they have begun to include climate-related risks in their risk management framework. For example, they have mapped risk exposures and allocated responsibilities within their organisation, set risk indicators (KPIs) and begun to develop qualitative mitigation strategies. However, these measures are still not considered sufficiently sophisticated and, in addition, there is still a considerable shortage of granular data. Indeed, less than 10% of institutions use sufficient forward-looking data to manage this risk. Both the ECB and the national supervisors hope that by the end of 2024 institutions’ practices in this area will be fully aligned with supervisory expectations.