[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-seo-292514-105":3,"detail-sidebar-cat-0-en-105":81,"doc-detail-292514-en":131},{"code":4,"msg":5,"data":6},0,"ok",{"site_id":7,"language":8,"slug":9,"title":10,"keywords":11,"description":12,"schema_data":13,"social_meta":74,"head_meta":76,"extra_data":78,"updated_unix":80},105,"en","systemic-climate-risk-tail-climate-risks-and-systemic-risk-in-finance","Systemic Climate Risk - Tail Climate Risks and Systemic Risk in Finance","","Market-based framework analyzing tail climate risks in the financial sector and their role in systemic risk formation. The study identifies European financial institutions most exposed to physical and transition climate risks, then evaluates how these risks can trigger contagion across interconnected institutions. Using securities data from 2005–2022, it finds transition risk increasingly and significantly affects systemic risk compared with physical risk, and it studies policy and institutional levers to mitigate climate-related financial risk.",{"@graph":14,"@context":73},[15,34,56],{"@type":16,"itemListElement":17},"BreadcrumbList",[18,23,27,31],{"item":19,"name":20,"@type":21,"position":22},"https://docshare.wps.com","Home","ListItem",1,{"item":24,"name":25,"@type":21,"position":26},"https://docshare.wps.com/document/","Document",2,{"item":28,"name":29,"@type":21,"position":30},"https://docshare.wps.com/document/research-report/","Research & Report",3,{"item":32,"name":10,"@type":21,"position":33},"https://docshare.wps.com/document/systemic-climate-risk-tail-climate-risks-and-systemic-risk-in-finance/292514/",4,{"url":32,"name":10,"@type":35,"image":36,"author":41,"headline":10,"publisher":44,"fileFormat":47,"inLanguage":8,"description":12,"dateModified":48,"datePublished":49,"encodingFormat":47,"isAccessibleForFree":50,"interactionStatistic":51},"DigitalDocument",{"url":37,"@type":38,"width":39,"height":40},"https://docshare.wps.com/thumbnails/systemic-climate-risk-tail-climate-risks-and-systemic-risk-in-finance/292514.png","ImageObject",300,407,{"name":42,"@type":43},"4398046744996","Person",{"url":19,"name":45,"@type":46},"DocShare","Organization","application/pdf","2026-11-04","2026-09-17",true,{"@type":52,"interactionType":53,"userInteractionCount":55},"InteractionCounter",{"@type":54},"ViewAction",15,{"@type":57,"mainEntity":58},"FAQPage",[59,65,69],{"name":60,"@type":61,"acceptedAnswer":62},"What does the paper investigate about climate risks and finance?","Question",{"text":63,"@type":64},"It studies how tail climate risks affect systemic risk in the financial sector, including how risks can spread as contagion through financial connections.","Answer",{"name":66,"@type":61,"acceptedAnswer":67},"How are physical and transition climate risks treated in the framework?",{"text":68,"@type":64},"The framework distinguishes individual tail risks and tail dependencies, and constructs physical and transition risk factors to capture changes in expected impacts of extreme climate shocks on exposed nonfinancial firms.",{"name":70,"@type":61,"acceptedAnswer":71},"What do the results show regarding systemic risk drivers?",{"text":72,"@type":64},"Unlike physical risk, transition risk significantly and increasingly influences systemic risk over 2005–2022 data for large European financial institutions.","https://schema.org",{"og:url":32,"og:type":75,"og:title":10,"og:site_name":45,"og:description":12},"article",{"robots":77,"canonical":32},"index,follow",{"doc_id":79,"site_id":7},292514,1789652364,{"code":4,"msg":82,"data":83},"success",[84,88,92,96,101,106,111,115,120,123,127],{"id":22,"doc_module":4,"doc_module_name":25,"category_name":85,"show_sort_weight":86,"slug":87},"Story & Novel",90,"story-novel",{"id":26,"doc_module":4,"doc_module_name":25,"category_name":89,"show_sort_weight":90,"slug":91},"Literature",80,"literature",{"id":33,"doc_module":4,"doc_module_name":25,"category_name":93,"show_sort_weight":94,"slug":95},"Exam",70,"exam",{"id":97,"doc_module":4,"doc_module_name":25,"category_name":98,"show_sort_weight":99,"slug":100},5,"Comic",60,"comic",{"id":102,"doc_module":4,"doc_module_name":25,"category_name":103,"show_sort_weight":104,"slug":105},6,"Technology",50,"technology",{"id":107,"doc_module":4,"doc_module_name":25,"category_name":108,"show_sort_weight":109,"slug":110},7,"Healthcare",40,"healthcare",{"id":112,"doc_module":4,"doc_module_name":25,"category_name":29,"show_sort_weight":113,"slug":114},8,30,"research-report",{"id":116,"doc_module":4,"doc_module_name":25,"category_name":117,"show_sort_weight":118,"slug":119},9,"Religion & Spirituality",20,"religion-spirituality",{"id":118,"doc_module":4,"doc_module_name":25,"category_name":121,"show_sort_weight":118,"slug":122},"World Cup","world-cup",{"id":124,"doc_module":4,"doc_module_name":25,"category_name":125,"show_sort_weight":124,"slug":126},10,"Lifestyle","lifestyle",{"id":128,"doc_module":4,"doc_module_name":25,"category_name":129,"show_sort_weight":97,"slug":130},19,"General","general",{"code":4,"msg":82,"data":132},{"doc_id":79,"user_id":133,"nickname":42,"user_avatar":11,"doc_module":4,"category_id":112,"category_name":29,"doc_title":10,"doc_description":12,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":55,"is_deleted":4,"is_public":22,"is_downloadable":22,"audit_status":22,"page_count":139,"language":140,"language_code":8,"site_id":7,"html_lang":8,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":12,"update_tm":80,"read_time":144,"preview_page_count":4},4398046744996,"Systemic Climate Risk  \nTristan Jourde1 & Quentin Moreau2  \nJune 2025, WP \\#993  \nABSTRACT  \nThis paper introduces a market-based framework to study the effects of tail climate risks in the financial sector. In addition to identifying the financial institutions most vulnerable to physical and transition climate risks, our framework explores the potential for these risks to induce contagion effects in the financial sector. Based on the securities of large European financial institutions (including the UK) spanning from 2005 to 2022, we show that, unlike physical risk, transition risk significantly and increasingly influences systemic risk in the financial sector. We also examine the potential levers available to financial institutions and regulators to address climate-related financial risk.  \nKeywords: Climate Risks, Contagion, ESG, Financial Stability, Systemic Risk  \nJEL classification: G10, G20, G32, Q54  \n1 Banque de France, tristan.jourde@banque-france.fr  \n2 The Hong Kong University of Science and Technology, [qmoreau@ust.hk](qmoreau@ust.hk)[ ](qmoreau@ust.hk)We thank François Belot, Jean-Gabriel Cousin, Patricia Crifo, Didier Folus, Emmanuelle Fromont, Stefano Giglio, Edith Ginglinger, Stéphane Guibaud, Jean-Baptiste Hasse, Emir Ilhan, Hyeyoon Jung, Mathias Kruttli, Quentin Lajaunie, Théo Le Guenedal, Yannick Le Pen, Carolin Nerlich, Clément Parrié, Luc Paugam, Thibaut Piquard, Kuntara Pukthuanthong, Jonathan Taglialatela, and Shaojun Zhang for their useful comments. We are grateful to Stephen Cecchetti, Loriana Pelizzon, Thorsten Beck, and other members of the ASC of the European Systemic Risk Board for selecting this paper as the winner of the 2023 Ieke van den Burg Prize. Weare also thankful to the E-axes 2024 Forum Research Prize Committee for awarding an honorable mention to this article. Additionally, we express our gratitude for their valuable feedback to the organizers and participants of the 2025 AFA Meeting, 2024 WFA Meeting, 2024 OFR Rising Scholars, CEBRA conference, HEC/HKUST seminar, 2023 RiskLab/BoF/ESRB Conference, 3rd Sustainable Finance Conference (Toulouse School of Economics), 2023 Financial Risks International Forum (Institut Louis Bachelier), 2022 JRC Summer School on Sustainable Finance, 2022 GFRA conference (Banque de France and Institut Louis Bachelier), 30th Global Finance Conference, 2022 Sustainable Finance Forum (AFFI), 8th Paris Financial Management Conference, Sustainable Finance and Corporate Governance workshop (IAE Lille), Financial Markets and Corporate Governance Conference (Deakin University), Banque de France seminar, SKEMA Business School seminar, and 2022 AREA workshop (Université Paris-Dauphine). Quentin Moreau acknowledges financial support from the French Association of Institutional Investors (Af2i). We thank the Banque de France for granting us access to the Securities Holdings Statistics dataset. The views expressed in this paper are the authors’ and should not be read or quoted as representing those of Banque de France or the Eurosystem. Potential errors are our own.  \nWorking Papers reflect the opinions of the authors and do not necessarily express the views of the Banque de France. This document is available on publications.banque-france.fr/en  \nNON-TECHNICAL SUMMARY  \nIn 2015, the Governor of the Bank of England, Mark Carney, highlighted the potential impact of climate change on asset prices and financial stability. Since then, the financial community has increasingly focused on understanding and addressing the potential systemic risks posed by climate change. These risks are typically categorized as physical risks, arising from climate-related hazards, and transition risks, stemming from the transition to a low-carbon economy. Climate risks can directly affect financial institutions through the devaluation of portfolios, increased insurance claims, or reduced borrower creditworthiness, termed as first-round effects. Moreover, simultaneous climate shocks or transmission ","cbCairf0rrodCpvl","https://ap.wps.com/l/cbCairf0rrodCpvl","pdf",3383224,118,"English","# Non-Technical Summary\n## Background: physical vs transition risks\n## Market-based framework and rationale\n## Step-by-step methodology\n## Evidence and institutional exposure","[{\"question\":\"What does the paper investigate about climate risks and finance?\",\"answer\":\"It studies how tail climate risks affect systemic risk in the financial sector, including how risks can spread as contagion through financial connections.\"},{\"question\":\"How are physical and transition climate risks treated in the framework?\",\"answer\":\"The framework distinguishes individual tail risks and tail dependencies, and constructs physical and transition risk factors to capture changes in expected impacts of extreme climate shocks on exposed nonfinancial firms.\"},{\"question\":\"What do the results show regarding systemic risk drivers?\",\"answer\":\"Unlike physical risk, transition risk significantly and increasingly influences systemic risk over 2005–2022 data for large European financial institutions.\"}]","Systemic Climate Risk - Tail Climate Risks and Systemic Risk in Finance | PDF",297]