In this episode of the IIF Global Regulatory Update Podcast, we host Paul Hiebert, Head of Systemic Risk & Financial Institutions Division at the European Central Bank (ECB) and Co-Chair of the ECB/ESRB Project Team on Climate Risk.

The discussion centers around the recent ECB/ESRB report titled “Towards Macroprudential Frameworks for Managing Climate Risk,” which introduces a surveillance framework for assessing the impact of climate-related risks on the EU financial system. Opening with an overview of the report's context, the podcast delves into comparisons with ECB/ESRB climate scenario analyses exercises and highlights key charts for listeners, including the below figure showing the rate and scale of the anticipated EU energy system transformation.

The discussion then explores the new surveillance framework, focusing on metrics and indicators, and delves into the report's key findings for the banking, insurance and non-banking sectors, respectively. The conversation extends to policy considerations, discussing the report’s menu of options for macroprudential authorities and the relationship with existing measures by financial sector supervisors.

The episode concludes with initial insights into nature-related financial risks, their significance compared to climate-related financial risks, and a glimpse into the ECB/ESRB Project Team's future plans.