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The adverse scenario is the core of every EU-wide stress test. It defines the hypothetical crisis that banks must withstand — and its severity determines how much capital they need to hold. For the 2025 exercise, the ESRB and ECB designed a scenario centred on escalating geopolitical tensions, trade fragmentation,…

On 1 August 2025, the European Banking Authority published the results of the 2025 EU-wide stress test. The headline finding: European banks are resilient. Despite absorbing €547 billion in cumulative losses over a three-year adverse scenario driven by geopolitical escalation and trade fragmentation, the EU banking system maintained a CET1…

The 2025 EU-wide stress test introduced a granular sectoral dimension that is often overlooked in headline coverage. Alongside the aggregate GDP and capital figures, the ESRB and ECB published a detailed breakdown of real gross value added (GVA) impacts across 16 NACE economic sectors for each of the 27 EU…

ESG reporting is the practice of disclosing data on a company’s environmental, social, and governance performance to investors, regulators, and other stakeholders. What began as a voluntary transparency exercise has become a regulatory obligation for thousands of companies worldwide — and a critical input for investment analysis, risk management, and…

Environmental, Social, and Governance investing — commonly known as ESG investing — is an approach to capital allocation that incorporates non-financial factors into investment analysis and decision-making. Rather than evaluating companies solely on revenue, margins, and growth, ESG investors assess how businesses manage environmental risks, treat their workforce, and govern…

Every two years, the European Banking Authority puts the continent’s largest banks through a rigorous test of resilience. The EU-wide stress test simulates what would happen to bank balance sheets if a severe — but plausible — economic downturn were to occur. For risk officers, compliance teams, and financial institutions,…

Climate change is reshaping government balance sheets across the OECD. As economies transition away from fossil fuels, governments face a structural fiscal challenge: the revenue base that has funded public services for decades is eroding, while spending demands from climate adaptation, extreme weather, and transition support are rising. Yet in…

This is the third and final article in our series on the Basel Committee’s voluntary framework for climate-related financial risk disclosures. The first article covered the framework’s background, key changes, and structure. The second article examined each of the six tables and templates in detail. This article focuses on the…

This is the second article in a three-part series on the Basel Committee’s voluntary framework for climate-related financial risk disclosures. The first article provides an overview of the framework, its background, and key changes from the 2023 consultation. This article examines each of the six tables and templates in detail.…

On 13 June 2025, the Basel Committee on Banking Supervision (BCBS) published its finalised framework for the voluntary disclosure of climate-related financial risks. The framework sets out a structured set of tables and templates designed to help banks communicate their exposure to both transition and physical climate risks. Although voluntary…