ST. PETERSBURG, July 4. /TASS/. Physical and transition risks arising from climate change constitute systemic risks for the Russian economy and financial sector. Without proactive measures from the largest borrowers, one-third of companies could face financial difficulties as early as the mid-2030s, warned Maksim Morozov, Deputy Director of the Financial Stability Department at the Bank of Russia, during the Bank of Russia Financial Congress.
"Our position as the Bank of Russia can be stated very concisely: climate risks are systemic risks for the Russian economy and financial sector. This applies not only to transition risks, which we are discussing today, but also to physical risk, although the latter remain outside the scope of today’s conversation. We share the view that climate risks of significant scale may materialize in the medium to long term. The key point is not to miss the moment when the medium-term horizon suddenly becomes short-term," Morozov said.
According to Morozov, the Bank of Russia conducted its own stress testing, which confirmed that without proactive measures, one-third of companies could encounter financial instability by the mid-2030s. "In 2023, we conducted a top-down stress test, where we made the assessments ourselves. We later confirmed those results in an exercise jointly conducted with financial institutions: without proactive actions by the largest borrowers, one-third of companies may face financial challenges as early as the mid-2030s. Given the accelerating pace of this agenda, these difficulties may emerge even earlier," he emphasized.
At the same time, Morozov noted that alongside risks, the climate agenda also creates new opportunities for Russia, such as rising global demand for critical minerals. "At the same time, these changes in the global economy bring not only risks but also opportunities for the Russian economy - such as increased demand for critical minerals and the development of nuclear energy, including small modular reactors," he said.
Thus, under current conditions, transition climate risks should not be viewed solely as an external agenda or threat but should serve as a catalyst for modernizing and strengthening the economy. "In these circumstances, our task as the regulator is to create favorable conditions for transformation and risk management practices," Morozov concluded.
TASS is an information partner of the congress.