On May 2020, French Prudential Supervision and Resolution Authority (ACPR) launched the climate pilot exercise which intend to measure the physical and transitional risks to which the French banking and insurance establishments are exposed by 2050.
On July 2020, ACPR published a report which presents the scenarios and the main assumptions used for the climate pilot exercise. It takes into account in particular: the macroeconomic projections of the Eurosystem which provide a first measure of the impact of the health crisis and which affect the start of the pilot exercise; the transition scenarios published on June 24, 2020, by the NGFS and responses to the public consultation.
The main objectives of the pilot exercise are:
- Raising financial institutions’ awareness on the climate change risk
- An assessment of both the vulnerabilities of institutions and the costs induced by non-compliance with the Paris Agreement
- To develop and improve the institutions’ capacity to integrate the climate risk in their financial risks’ measurement, assessment and day-to-day management