Stress tests expose climate risks in loan books

Efforts to quantify the risk of global warming are changing the way banks manage credit portfolios

Rising temperatures could spell trouble for lenders

Banks are required to run stress tests to model the impact of a 5% rise in unemployment, or a jump in interest rates. But what if the temperature of the earth rose a full 2 degrees Celsius, or more?  

Two degrees was the limit of the 2015 Paris climate accord, brusquely set aside by President Donald Trump. But banks, less climate-sceptic than the president, have begun to filter their portfolios through doomsday scenarios: coastlines seeping inland, stewing heats, violent winds, parching drought