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By Vanessa MÜLLER, Blanca HIDALGO, Andrea ZARA, EY Luxembourg*
Climate change is increasingly recognized not only as an environmental and social challenge but also as a major financial and economic risk, and a strategic opportunity. For financial institutions especially, understanding and managing exposure to climate-related risks has become imperative. These risks can present a dual challenge for the sector: the increasing frequency of physical events like floods and heatwaves, and the systemic shifts required to transition to a low-carbon economy. For EU banks, managing both dimensions is no longer optional, but instead it is a strategic necessity as these dynamics impact all core banking functions, from lending and investment to private banking and advisory...
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