Bulletin No. 262, article 2. If the transition to a low-carbon economy were to be delayed, abrupt and uncoordinated, it could lead to substantial losses on the financial markets. According to the forward-looking indicator presented in this article, equities would be the most exposed financial assets at global level, facing a sharp correction of 6.8% on average. However this number would vary considerably across different sectors. It could amount to as much as -24% for fossil fuels, where some companies would lose most of their value. Corporate and sovereign bonds would be less sensitive to these developments. The French financial sector (i.e. banks, insurers and investment funds) appears capable of absorbing the transition risk, particularly thanks to the sectoral diversification of portfolios, however, some players could face greater losses. These estimates do not take aggravating factors into account: the difficulties of adapting physical capital, the potential amplification of financial shocks, and the materialisation of physical risks linked to climate change whose effects could prove more severe in the medium term.
1 A forward-looking transition risk indicator for the French financial sector
Climate change represents both an environmental challenge and a risk to economic and financial stability. Faced with tangible and accelerating global warming (World Meteorological Organisation, 2025), and inadequate international efforts to reduce greenhouse gas emissions (United Nations Environment Programme, 2024), the economic and financial system is exposed to increased climate risk – both physical (increased frequency and magnitude of natural disasters) and transitional (new climate policies, technological disruption or changes in consumer preferences). If these changes are not anticipated, they could lead to sharp corrections in the financial markets and impairment of the portfolios held by financial intermediaries (banks, insurance companies, investment funds).
Despite a scientific consensus and the worsening effects of climate change, the future direction of climate policy remains uncertain. This uncertainty is fuelled by mixed political signals. The US federal administration has backtracked on its climate change programme. The European Union has simplified certain environmental regulations to safeguard the competitiveness of businesses, putting a strain on the disclosure framework. Finally, geopolitical tensions have led to a prioritization of energy security and defence in a context of severe budgetary constraints (International Energy Agency, 2022). For investors, these signals complicate efforts to anticipate the future framework, increase the cost of capital for green projects and may hamper the investments needed for the low-carbon transition. This lack of visibility increases the risk of a disorderly adjustment, which could threaten financial stability.
It is essential for financial intermediaries (as well as supervisory authorities) to be able to anticipate the effects of climate risk on financial markets. Traditional indicators, which focus on portfolio exposure to carbon-intensive assets or sectors affected by climate policy (see, for example, Gosset and Nefzi, 2023; Jourde, Piquard and Salakhova, 2024), do not provide a direct monetary quantification of the risk of a correction to financial portfolios. It is therefore necessary to develop forwardlooking indicators capable of estimating the impacts of various climate scenarios on the value of financial assets. Such indicators can facilitate proactive risk management by public and private actors.
This study presents a new forward-looking indicator of climate transition risk for market portfolios in the French financial sector. It is based on the climate scenarios of the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) and projects the impact of the low-carbon transition on corporate revenue and financial asset values on a granular scale. …
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Updated on the 20th of March 2026