For physical risks:

Institutions should consider acute risks resulting from the increasing frequency and severity of extreme climate or weather events (such as heat waves, floods or water sources contamination) and chronic risks arising from long-term shifts in climate and weather patterns (such as rising average temperatures, sea level rise or decline in pollination).

Microeconomic channels:

• • Corporate profitability is impacted by severe disruptions to business or the value chain due to highly adverse environmental conditions, by gradual deterioration due to working conditions, or by rising costs (e.g. adaptation costs, price of key inputs);
• • Household income is affected by environmental disruptions, by gradual deterioration of economic activities, or by impact on health;
• • Corporate assets or household properties are damaged by severely adverse weather conditions or gradually deteriorated (e.g. shrink-swell of clays);
• • Companies and households bear higher maintenance and adaptation costs, or even reconstruction costs.

Macroeconomic channels:

• • Knock-on effects of severely adverse weather, pollution incidents, water scarcity and other global warming and ecosystem degradation effects to the entire economy of a certain geographical area;
• • Significant shifts in prices from supply shocks resulting in inflationary pressure;
• • Reduced workforce productivity and health impacts;
• • Supply chain disruptions and resource scarcity;
• • Migrations and displacements. FINAL REPORT ON GUIDELINES ON ENVIRONMENTAL SCENARIO ANALYSIS

1. Overview

1.1 References

1.2 Identified Requirements

1.3 Related Standards

2. Identified Requirements

3. Related Standards

• EBA - Published by the European Banking Authority at https://www.eba.europa.eu/