Assessing climate-related and environmental risks in the financial sector and supervising the associated risk management

Climate change and the transition to a more sustainable low-carbon economy have the potential to greatly impact the whole economy and financial system and are thus a source of financial risks. In our role as supervisory and macroprudential authority, we have to ensure that the financial system is resilient to these climate-related risks.

Analysing these risks for the Belgian financial sector, our publications are aimed at encouraging financial institutions to measure, assess and manage these risks and to publish information about them. In addition, we want to promote the greening of the financial system.

Mainly in collaboration with several international working groups, we are also looking at how prudential regulations may need to be adapted to encompass the public disclosure of information on these risks and their inclusion in banks' strategies, governance structures and risk management, and eventually the possible adaptation of capital requirements.

While the main focus is on climate-related risks, the scope has been gradually broadened to include sustainability risks, including environmental, social and counterparty governance risks

Not just COVID-19 but also climate change can cause unexpected and major shocks for the economy and financial stability. However, society can prepare for this: it can take measures to limit the probability of a risk materialising and the scope of its impact, as well as building up resilience to potential unexpected shocks. Even in the challenging circumstances of a worldwide health crisis, we should not lose sight of climate change as an urgent policy priority. The longer it takes for concrete measures to be taken, the harder the measures will need to be to achieve the goal of reducing CO2 emissions and the greater the transition risks will be.
Brenda —
Prudential Supervision and Financial Stability Analyst —

We have been studying the climate-related risks to financial stability since 2018, exposing them in our 2018 Financial Stability Report and our 2019 Financial Stability Report. At the end of 2018, we surveyed financial institutions, looking at the extent to which they are taking climate-related risks into account in their strategy and risk management. The results of this survey and our recommendations for the Belgian financial sector to assess, manage and disclose the risks are discussed in the 2019 Financial Stability Report.

In our 2020 Financial Stability Report, there is an article on the transition risks of real estate exposures in the Belgian financial sector. We recommend that financial institutions analyse the extent to which the energy inefficiency of their real estate exposures could have an impact on current and future credit risks, and to take measures to manage and limit this transition risk.

In a recent Circular (NBB_2020_45), we have formulated our expectations for collecting data on residential mortgage loans, investment loans with real estate as collateral or other commercial real estate exposures. We are also calling for energy efficiency data for new residential mortgage loans to be reported to the Bank.

In the ECB guide on climate-related and environmental risks, the ECB outlines its understanding of the safe and prudent management of climate-related and environmental risks under the current prudential framework, and how it expects banks to become more transparent in disclosing these. These expectations are set to have a major influence on the operational supervision of banks in coming years.

The financial sector will play a key role in facilitating the transition to a sustainable economy, but will also have to face significant risks. It will perform a central role in mobilising the necessary financial resources, helping the economy to adapt, and mitigating the climate-related risks.
Jean Hilgers —
Director —

Climate Hub

The National Bank has set up a cross-departmental Climate Hub to foster awareness of climate change for the purpose of stimulating cooperation and the exchange of information between departments on climate change and sustainable finance. Members meet regularly and provide relevant information to the Bank's management and the general public. In [month] 2022, the Climate Hub launched the Climate Dashboard to centralise information and indicators relating to climate change and sustainable finance. By means of this initiative, the NBB aims to further inform the general public about the implications for the economy and the financial system of climate change and the net-zero transition.

In November 2022, the Climate Hub launched the Climate Dashboard to centralise information and indicators relating to climate change and sustainable finance. By means of this initiative, the NBB aims to further inform the general public about the implications for the economy and the financial system of climate change and the net-zero transition.


We are actively involved in various national and international working groups developing methodologies and metrics to assess climate-related and environmental risks and examining how to adapt the regulatory and prudential framework to take better account of these risks. We also actively contribute to most of the publications of these working groups and forums.

Network for Greening the Financial System (NGFS)

In 2018, the Bank became a member of this worldwide network bringing together central banks and supervisory authorities with the aim of helping to manage climate-related and environmental risks, and to green the financial sector at a faster pace.

Set up in 2017 by eight banks and supervisory authorities, the NGFS now has more than 70 members. Since its establishment, the network has published many very useful documents, such as guidelines for including climate-related and environmental risks in prudential supervision and a handbook and a series of reference scenarios for performing scenario analyses.

The NBB's commitment at COP26

On the occasion of the 2021 UN Climate Change Conference in Glasgow (COP26), the NBB endorsed the commitment by the Network of Central Banks and Supervisors for Greening the Financial System (NFGS), of which the Bank is also a member, to contribute to the objectives of this climate summit. In its own statement, the NBB described how, like the ECB, it intends to contribute, as an independent institution and within the scope of its powers, to decisive policy measures to facilitate realisation of the goals of the Paris Agreement and the transition to a green, low-carbon economy.

Sustainable Insurance Forum (SIF) & International Association of Insurance Supervisors (IAIS)​

The Sustainable Insurance Forum (SIF) is a worldwide network of insurance supervisory authorities and regulators tasked with looking at ways of countering the sustainability challenges facing the insurance sector. Set up in December 2016, it offers its 30 members a platform for sharing knowledge, research and collective action. The Bank has been a member of the SIF since 2018.

The SIF works closely with the International Association of Insurance Supervisors (IAIS), a body helping to develop standards and other support material for supervising the insurance sector.

The two organisations have issued a number of interesting publications:

Basel Committee on Banking Supervision (BCBS)

The Basel Committee on Banking Supervision, the primary global standard setter for the prudential regulation of banks, is looking at how supervisory authorities and banks can take account of climate-related and environmental risks and how regulations can be adapted to take better account of these risks.

Bank for International Settlements (BIS)

Bank for International Settlements

Acting as a bank for central banks, the Bank for International Settlements (BIS) wants to promote international cooperation in monetary and financial stability.

Relevant BIS publications:

European Commission


At European level, the European Green Deal and the EU Action Plan on Sustainable Finance play a very important role. Together with the Ministry of Finance, the NBB is a member of the Member States Expert Group on Sustainable Finance, a group coordinating sustainable finance initiatives at European and national level and advising the European Commission on the implementation of EU legislation and policy on sustainable finance.

European Insurance and Occupational Pensions Authority (EIOPA)

The European Insurance and Occupational Pensions Authority (EIOPA) is working on disclosure standards for insurance companies and on the inclusion of ESG risks and scenario analyses in the risk management of insurance companies. The EIOPA has published a consultation document – Own Risk and Solvency Assessment  – on the use of climate scenarios, carried out a stress test on company pensions in 2019, and is currently working on a scenario analysis in the insurance sector.

EIOPA publications on its sustainable finance projects: 

European Banking Authority (EBA)

The European Banking Authority (EBA) is working on disclosure standards for banks and investment companies. It has also published a consultation document on the management and supervision of ESG risks. In addition, it is working on a report on a possible adjustment of the minimum capital requirements for ESG risks.

European Central Bank (ECB)

At the end of 2020, the ECB published its Guide on Climate-Related and Environmental Risks, outlining its expectations for risk management and public information by credit institutions. In addition, it has performed a number of studies on how climate-related and environmental risks are to be taken into account in the ICAAP (Internal Capital Adequacy Assessment Process) and how information about them is to be publicly disclosed. Together with the European Systemic Risk Board (ESRB), the ECB is also working on risk indicators, methodologies and scenarios to be able to assess the impact of climate-related risks on financial stability. In 2020, this joint working group published the report Positively green, measuring climate change risks to financial stability, listing several initial results on the monitoring and assessment of climate-related risks, including the results of a top-down stretch test.

Belgian Taskforce on Sustainable Finance

This working group brings together various regional and federal agencies with a view to exchanging information and positions on sustainable finance and to providing input for Belgian positions in the field of European legislation and policy on sustainable finance.