The Network for Greening the Financial System (NGFS) has issued a stark Declaration on the Economic Cost of Climate Inaction at COP30 in Belém, Brazil, warning that delaying climate measures will sharply escalate global economic and financial risks. The European Banking Authority (EBA), an active NGFS member, announced the release of the declaration and reaffirmed its commitment to supporting a well-managed low-carbon transition.
The declaration — endorsed by 146 central banks and financial supervisors and 23 observers worldwide — sets out the growing macro-financial implications of insufficient climate action. It highlights evidence that:
- The economic costs of climate inaction are rising rapidly, with direct consequences for monetary and financial stability.
- A three-year delay in climate action could halve the effectiveness of transition efforts, driving transition costs up from 0.5% to 1.3% of global GDP by 2030.
- Climate-related shocks risk triggering global spillovers by disrupting food systems, energy markets and supply chains, disproportionately affecting vulnerable economies.
- Financial institutions must embed climate and nature-related risks into their strategies through scenario analysis, disclosure standards and transition planning.
Drawing on recent NGFS analytical work, including updated climate scenarios, the declaration stresses that integrating environmental risks into financial supervision strengthens both the resilience of the financial system and the prospects for a sustainable global economy.
The EBA underscored its own role in advancing this agenda. In line with its sustainable finance roadmap, the Authority continues to integrate environmental factors into EU banking regulation, strengthen banks’ management of environment-related financial risks and improve data availability through enhanced climate-related disclosures and its ESG risk dashboard. Climate considerations are also increasingly embedded in EU-wide supervisory assessments and stress tests.
EBA Chair José Manuel Campa said: “Financing sustainability and facilitating the needed change is a key opportunity for the EU banking sector. At the same time, we must ensure that financial risks stemming from ESG factors are well-managed.”
EBA Executive Director François-Louis Michaud added: “Sound environmental risk management is essential. Only a robust banking sector can effectively fund the transition towards a sustainable European economy.”
