Stress tests expose climate risks in loan books

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

temperature-climate-change
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

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