• Over 70% of EU/EEA banks’ corporate exposures are linked to sectors highly contributing to climate change.
• Less than 30% of banking exposures are located in areas of elevated physical climate risk.
• Green Asset Ratio (GAR) remains low, averaging below 3%, reflecting slow economy-wide taxonomy alignment.

The European Banking Authority (EBA) has launched a new ESG dashboard, offering centralized, comparable climate risk indicators for EU/EEA banks. The dashboard aims to strengthen monitoring and benchmarking of transition and physical climate risks based on banks’ Pillar 3 ESG disclosures.

“This dashboard provides benchmarks and enhances the assessment and monitoring of transition and physical climate-related risk across the EU/EEA banking sector,” the EBA stated.

Key findings highlight significant transition risk exposure. The data shows that in most EU/EEA countries, banks have more than 70% of corporate exposures tied to sectors that heavily contribute to climate change. This presents a major vulnerability if these companies face regulatory shifts, technological changes, or evolving consumer demands.

While sector-wide data cannot account for individual company efforts to mitigate risks, the overall exposure suggests a pressing challenge for risk management strategies.

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Physical risk exposure appears relatively lower. The EBA reports that in most countries, less than 30% of banking sector exposures are located in areas deemed to have elevated physical climate risks. However, variations in data granularity and methodologies across banks require careful interpretation.

Real estate lending indicators show that approximately 50% of immovable property collateral falls within the first two energy efficiency categories (below 200 kWh/m²). Yet, the EBA cautions:

“Banks report that they largely rely on proxies and estimates with regard to energy efficiency data, hence the need to interpret this data with caution.”

On the green finance side, the Green Asset Ratio (GAR) remains low, averaging slightly below 3% across EU/EEA banks. This figure reflects not only early-stage economic transition but also the strict requirements of the EU Taxonomy.

“The currently low level of the indicator owes to the structure of the indicator itself,” the EBA clarified, adding that loan-level GAR calculations show somewhat higher green alignment levels.

To support deeper analysis, the dashboard also provides additional indicators focused on specific counterparty types, eligibility for taxonomy assessment, and broader green lending activities beyond EU Taxonomy criteria.

The EBA’s ESG dashboard marks a critical step toward greater transparency and risk benchmarking in the European banking sector, offering executives and investors a clearer view of the climate risks embedded in banks’ balance sheets.

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