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.

This publication will follow the recommendations of the Task Force on Climate Related Disclosures and the NGFS guide on disclosure for central banks.12  Third, I would like to address sustainability from the standpoint of the financial system and, in particular, the banking system. As I have noted on other occasions, the banking sector is not the central player or driving force behind the transformation needed to ensure a more sustainable economy. It is public agents, essentially governments, that are best equipped with the mechanisms and instruments needed to instigate these changes. Nonetheless, thanks to its ability to channel funds, the banking sector has a pivotal role to play, one that must be borne in mind and, needless to say, strengthened and supervised. Ensuring a more robust and sustainable financial system is among the goals of the EU and the supervisory authorities. The sector must be stable and resilient so as to be able to properly channel the funding the economy needs. To this end, sustainability-related aspects (including climate risk) must be borne in mind given their impact on the traditional financial risks managed by banks, such as credit risk. The approach taken by supervisors and prudential regulators must be comprehensive and include the identification, measurement, management and monitoring of ESG risks, together with the appropriate disclosure of information on such matters. 11  For more details, see: https://www.bde.es/bde/en/secciones/sobreelbanco/sostenibilidad-medioambiental/informacion-general/PoliticaMonetaria-y-cartera-de-inversion/la-gestion-de-carteras-por-cuenta-propia.html 12  See NGFS (2021). Guide on climate-related disclosure for central banks, December.