On October 21, 2025, the European Banking Institute (EBI), in partnership with the E-axes Forum, will host an upcoming webinar titled “Regulatory Capital as a Catalyst for Climate Risk Mitigation.” The event will highlight one of the most pressing challenges faced by financial regulators, banks, and climate risk modelers today: how to adjust prudential capital frameworks to address the growing and evolving threats of climate change.
Climate change not only causes environmental impacts but also shifts the financial risk landscape. Physical hazards, such as floods, extreme heat, wildfires, and storms, along with transition pressures including policy changes, carbon pricing, and technology disruptions, create credit, market, operational, and liquidity risks for financial institutions. As these risks grow, traditional capital models based on historical data and fixed assumptions are becoming less effective.
This event will examine how disclosure regimes, despite advancing quickly, continue to outpace capital regulation. To bridge the gap, regulators need to rethink how capital adequacy, risk weighting, stress testing, and supervisory frameworks incorporate climate science, turning capital buffers into tools for resilience.
The webinar will convene policymakers, academics, and financial sector experts to discuss how to translate climate risk—defined by hazard, exposure, and vulnerability—into the language of traditional financial risk categories. The sessions will explore how climate impacts on borrower solvency, market repricing, supply chain disruptions, and liquidity stress can be incorporated into capital models. It will also review how disclosure mandates and supervisory expectations can be aligned with risk-based capital principles, as well as how scenario analysis and stress testing can be enhanced to incorporate forward-looking climate scenarios.
For institutions and technical teams developing climate-risk analytics, this discussion highlights a vital evolution. Models must not only measure risk but also translate these outcomes into capital-relevant metrics. This involves generating Value-at-Risk (VaR), Expected Annual Loss (EAL), and other metrics aligned with prudential frameworks, incorporating scenario comparability consistent with regulatory stress scenarios, and ensuring auditability and traceability of model assumptions. Institutions that prepare for these standards now will be better positioned as regulators move toward incorporating climate risk into capital requirements.
The European Banking Institute’s event marks a key step toward aligning financial regulation with the realities of a changing climate. It emphasizes regulatory capital as a potential driver for resilience rather than a limitation. Financial institutions that proactively incorporate climate risk into capital planning will be better prepared to meet new supervisory expectations and succeed in the transition to a more sustainable economic system.
© European Banking Institute 2015–2025.
European Banking Institute e.V., Frankfurt am Main, Germany (“EBI”). The European Banking Institute is an eingetragener Verein (e.V.) under German law (§ 21 of the German Civil Code) registered in Frankfurt am Main, Germany. EBI is a non-profit organisation established exclusively and directly for public benefit (“gemeinnützig”) within the meaning of “Steuerbegünstigte Zwecke” in the German tax administration code (“Abgabenordnung”). All rights reserved.
(Source: European Banking Institute. (2025, October 21). Regulatory capital as a catalyst for climate risk mitigation [Webinar]. European Banking Institute. Retrieved from https://ebi-europa.eu/event/regulatory-capital-as-a-catalyst-for-climate-risk-mitigation.)
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