Think-tank concludes that financial firms need to be examined for overexposure to carbon-related assets as part of governance reforms in sustainable finance.
Financial institutions should be stress-tested for their exposure to "carbon-intensive assets", according to a report from the Brussels-based think-tank Bruegel. In a report based on the work of the EU's expert group looking at sustainable finance, Bruegel has developed what it calls a set of guidelines for sustainable finance. The report, Investing for the common good: a sustainable finance framework, said: "Financial institutions should be stress-tested to identify overexposure to and concentration in carbon-intensive assets. These carbon stress tests make use of various climate scenarios, including the adverse scenario of late adjustment resulting in a ‘hard landing’, and have a long horizon over which adverse events could occu