**Title: European Banks Maintain Stable Climate Risk Exposure, EBA Reports**
In a recent report from the European Banking Authority (EBA), it has been revealed that climate-related risks for banks across the European Union (EU) and the European Economic Area (EEA) have remained largely stable during the second half of 2025. The findings are part of the EBA’s environmental, social, and governance (ESG) risk dashboard, which tracks banks' exposure to both transition and physical climate risks.
According to the report, the proportion of banks' exposures to sectors identified as significant contributors to climate change has remained consistent at 62%. This stability indicates that the overall transition risk profile at the EU level has not seen substantial fluctuations, with only a few jurisdictions reporting changes in their exposure shares during the period from June to December 2025.
The EBA noted that the banks and countries with the highest exposure to transition risk have also largely remained the same. This consistency suggests that the banking sector is maintaining its existing risk profiles in relation to climate change, even as the landscape evolves.
In terms of mortgage portfolios, the EBA reported similar stability. However, there are indications of gradual improvements in the quality of data used to evaluate energy efficiency within these portfolios. The share of mortgage exposures classified as highly energy efficient—defined as those with energy consumption of 100 kWh per square meter or less—has seen a slight increase. Concurrently, the proportion of mortgage exposures lacking energy performance information has decreased marginally, while the share of exposures based on estimated energy performance scores has also seen a slight decline. These trends suggest that banks are progressively gaining access to more comprehensive and reliable climate-related data, which enhances their ability to monitor climate risks effectively.
The report also examined banks' exposures sensitive to physical climate risks, which remained stable across most jurisdictions. However, the EBA highlighted notable discrepancies between countries, with average exposure shares ranging from less than 10% in some areas to over 55% in others. These variations can be attributed to differences in geographical, economic, and sectoral characteristics, as well as the methods used to classify and assess physical climate risks.
Overall, the findings from the EBA's report for the latter half of 2025 indicate a stable climate-related risk exposure landscape across the EU and EEA banking sector. At the same time, there are incremental improvements in the quality and availability of climate-related reporting data. The EBA’s ESG risk dashboard serves as a crucial tool for providing regular insights into climate-related risks within the banking sector, enabling better monitoring of both transition risks—stemming from the shift towards lower-carbon economies—and physical risks associated with climate change.
The latest findings suggest that while the fundamental climate risks facing European banks have not undergone significant changes, enhancements in data collection and reporting practices are gradually fortifying the sector’s capability to assess and monitor these exposures. This progress is vital for ensuring that banks can effectively navigate the challenges posed by climate change and contribute to a more sustainable financial future.