EU Banks’ Climate Risk Exposures Hold Steady as Data Gaps Narrow, EBA Says

Key Takeaways

• Climate Risk Exposures Remain Stable: Banks across the EU/EEA saw little change in their transition and physical climate risk indicators during the second half of 2025.
• High-Impact Sectors Still Account for 62% of Exposures: The share of bank exposures to sectors highly contributing to climate change remained broadly unchanged at 62% between June and December 2025.
• Mortgage Data Quality Is Improving: The share of mortgage exposures without energy-performance information declined marginally, as did reliance on estimated energy-performance scores.
• Physical Risk Varies Widely by Country: Average exposures sensitive to physical climate risk ranged from below 10% in some jurisdictions to above 55% in others, reflecting geographic, economic, sectoral and methodological differences.
• Better Data Strengthens Risk Monitoring: The EBA said incremental improvements in climate-related data availability and quality are supporting more robust monitoring of risks across the banking sector.

Deep Dive

European banks entered the final months of 2025 with much the same climate-risk exposure they had six months earlier. What changed was their ability to measure it. The European Banking Authority said last Thursday that climate-related risk indicators across banks in the European Union and European Economic Area remained broadly stable during the second half of last year, with little movement in either transition or physical risk exposures. At the same time, banks made gradual progress filling some of the data gaps that have complicated efforts to assess those risks, particularly in mortgage portfolios.

The EBA’s latest Environmental, Social and Governance risk dashboard found that 62% of banks’ exposures were to sectors that contribute highly to climate change, broadly unchanged between June and December 2025. While a small number of jurisdictions recorded changes over the period, the overall transition-risk profile remained stable, and the countries and banks with the greatest exposure were largely the same.

The findings offer a picture of climate risk in European banking that is notable less for what moved than for what did not. The sector’s exposure to industries considered significant contributors to climate change remains substantial, but the EBA found no broad shift in that exposure during the six months covered by the dashboard.

There was more movement in the information banks have available to understand another part of the problem.

Mortgage Data Gets Clearer

The distribution of mortgage exposures across energy-efficiency categories remained broadly stable, according to the EBA, but the quality and availability of the underlying data continued to improve. The share of mortgage exposures tied to highly energy-efficient properties, which is defined as those using no more than 100 kilowatt-hours per square meter, increased slightly during the period. At the same time, the proportion of exposures without energy-performance information declined marginally, as did the share for which energy-performance scores had to be estimated.

The changes were modest, but they address a persistent challenge in climate-risk assessment. Banks cannot reliably judge the energy characteristics of their mortgage portfolios when information about the properties behind those loans is missing or must be estimated. The EBA said the latest figures point to continued improvement in the availability and quality of the data used for those assessments, giving banks and supervisors a stronger basis for monitoring climate-related risks.

Physical climate risk was similarly stable, though the European averages conceal wide differences between countries. Banks’ exposures considered sensitive to physical climate risk were unchanged across most jurisdictions during the second half of 2025. The level of exposure varied sharply, however, with national averages ranging from below 10% in some jurisdictions to above 55% in others.

The EBA said those differences reflect a mix of geographic, economic and sectoral characteristics, as well as variations in how jurisdictions classify and assess physical climate risks. That makes the figures something other than a simple measure of which banking systems face the greatest physical threat: differences in methodology also shape what appears in the data.

The dashboard points to a European banking sector whose climate-risk profile changed little during the latter half of 2025. Transition exposures remained broadly steady. Physical-risk exposures were largely unchanged. Even the banks and countries carrying the greatest transition exposures were mostly familiar.

The more discernible progress was in measurement. The EBA uses its ESG risk dashboard to provide a regular view of climate-related risks across the EU/EEA banking sector, drawing on banks’ ESG disclosures to monitor exposure to transition and physical risks and assess vulnerabilities associated with climate change. Better data does not reduce those exposures by itself, but it gives banks and supervisors a clearer picture of where they sit.

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