15. With regard to the materiality assessment of environmental risks, institutions should use both …

With regard to the materiality assessment of environmental risks, institutions should use both qualitative and quantitative information. Institutions should consider a sufficiently large scope of environmental factors that includes at least climate-related factors, degradation of ecosystems and biodiversity loss. Institutions should assess both transition and physical risk drivers, taking into account at least the following:

• a) For transition risks:
• i. the main economic sectors that the financed assets support or in which the institution’s counterparty has its principal activit ies;
• ii. ongoing and potential future material changes in public policies, technologies and market preferences (e.g. new environmental regulations or tax incen-tives, development of innovative low-carbon technologies, shifts in consumer or investor demand);
• iii. with respect to climate-related risks:

• b) For physical risks:
• i. the geographical areas in which key assets of counterparties (e.g. production sites) and, in particular for real estate exposures, physical collateral is located;
• ii. the vulnerability level to environmental hazards (e.g. temperature-related, wind-related, water-related, solid mass-related hazards) associated with dif-ferent climate scenarios and transition pathways or, for SNCIs and other non-large institutions, associated with at least one adverse scenario.

8 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 03/12/2020, p. 17) - Climate Benchmark Standards Regulation - Recital 6: Sectors listed in Sections A to H and Section L of Annex I to Regulation (EC) No 1893/2006

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

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