, the extent of which we investigate at danmarks nationalbank. • we analyse how climate change and transition risks will affect the danish economy and financial system. • the aim of this work is to facilitate a dialogue with the financial sector about risks and opportunities. the slide offers some examples of our analytical work. • the pieces include work on flood risk in the housing market, energy requirements on real estate and pricing of risk in equity markets. • the gist of the analytical work suggests that climate - related risks tend to be underpriced, although the extent to which this is the case seems to be decreasing. • climate - related risks are becoming increasingly salient in financial markets. page 8 of 21 slide 9 proper risk pricing is challenged by the fact that climate - related exposures are opaque. • the assessment of climate change and transition - related risks cannot be based on historical data and distributions in the way that risk assessments are traditionally made. new scenario - based techniques for risk pricing are being developed. • moreover, properly assessing climate - related risks requires new data and a higher level of transparency of exposures in balance sheets. • many companies lack knowledge about – or do not share – the greenhouse gas emissions in their supply chains. • this makes it difficult for banks and investors to assess how a company ’ s failure to transition will impact its profitability. a higher degree of transparency and systematic and standardised collection of data across companies and value chains, including financial portfolios, is necessary. • many initiatives to increase the level of transparency of climate - related exposures are under way or being implemented. • the task force on climate - related financial disclosures ( tcfd ) has been central in expanding voluntary disclosures. new eu regulation introduces stricter requirements for both financial and non - financial businesses ’ disclosures. page 9 of 21 • the corporate sustainability reporting directive ( csrd ) and sustainable finance disclosure regulation ( sfdr ) are prominent examples of disclosure regulation. • climate - related transparency is also adhered to by european central banks, with the introduction of the common minimum disclosures of the eurosystem. i will come back to danmarks nationalbank ’ s own disclosures later in the presentation. slide 10 finally, i will turn to how climate change affects our work at danmarks nationalbank. page 10 of 21 slide 11 danmarks nationalbank ’ s climate - related activities can be categorised under three headings. • they relate to our central bank mandate

this risk into their policies / pricing decision and also devise means for sharing of information on such exposures amongst themselves. regulatory guidelines have also since been issued outlining the capital and provisioning requirements for exposure to entities with significant unhedged forex exposures. v ) human resource issues i do not need to emphasize the hr issues in banks. this is a decade of retirement for the psbs and i am sure those working there are already feeling the pinch of the loss of experienced hands in their day to day operations. while the recruitments would be happening at the junior levels, there would be a virtual vacuum at the middle and senior level for some time to come. the absence of middle management could lead to adverse impact on banks ’ decision making process as this segment of officers played a critical role in translating the top management ’ s strategy into workable action plans. some of the major banks are also suffering on account of prolonged leadership vacuums at the top. all banks, including those in the private sector, are witnessing high attrition rates, giving rise to resource gaps. the problem is set to get accentuated further once the banks that have been newly licensed / likely to be licensed, start hiring. therefore, bridging resource gaps and managing employee turnover are major challenges that banks need to be prepared to address. the banks need to continuously enhance the skill levels of their employees so as to remain viable and competitive and to take advantage of new opportunities. the banking personnel, across the cadres need to be suitably trained to acquire necessary skill sets to perform their jobs more efficiently. the biggest challenge is to build capacity at a rate which matches the loss of existing talent and skills to retirement, poaching and resignations. the training initiatives must ensure that the available talent pool in the banks is able to always keep pace with the fast changing ways in which banking is conducted. of course, in these challenges also lie an inherent opportunity for banks to redraw their organizational profile and to create hr systems and processes best suited to the needs of the future. vi ) revision to the priority sector lending guidelines the revised priority sector lending guidelines have been released last week. lending to a few new sub - sectors like renewable energy, social infrastructure and to the medium enterprises would now be treated as priority sector lending. concept of a tradable priority sector lending certificate ( pslc ) has also been introduced, which would enable the ‘ deficit ’ banks to buy these certificates from ‘ surplus ’ banks to