Climate risk in the banking sector: BAM and the World Bank present their report in Casablanca

Bank Al-Maghrib (BAM) and the World Bank (WB) presented, Thursday in Casablanca, the results of their joint report on the assessment of climate risks in the Moroccan banking sector.

This report, the results of which were unveiled during a high-level workshop in the presence of the Director General of BAM, Abderrahim Bouazza, and the WB Country Director for the Maghreb and Malta, Jesko Hentschel, reveals that the Moroccan banking sector is exposed to physical climate risks, such as floods and droughts.

In his opening speech, Mr. Bouazza affirmed that this report, developed over two years, constitutes a major step in the process of progressively establishing a framework for regulating climate-related risks.

This study, he continued, made it possible to better understand climate issues, to identify potential sources of climate-related risks, and to establish and test methodologies and tools for measuring climate-related financial risks. .

The study also helped draw lessons from the challenges faced in terms of climate-related risk data and modeling, given the complexity of the links between macroeconomic, financial and climate impacts, he added.

And to support: “The ongoing work on the development of the climate taxonomy at government level with the parties concerned, including Bank Al-Maghrib, and with the support of the World Bank, should contribute to reducing the data gap. »

This exercise will make it possible to continue to evolve the regulatory framework and improve the assessment of climate risks while resolving the conceptual and technical challenges encountered, indicated Mr. Bouazza.

For his part, Mr. Hentschel highlighted the increase in the frequency of floods, “a phenomenon which generates considerable annual costs estimated at 4.5 billion dirhams for the Kingdom. »

This report used macroeconomic models to assess the financial impact of the floods, he detailed, specifying that these models also examined the relationship between the financial sector and the macroeconomy, as well as the risks associated with the transition to a green growth.

In this sense, Mr. Hentschel estimated that this transition represents an opportunity for Morocco, especially since the Kingdom is geographically close to Europe and has already undertaken significant changes in its energy matrix and its model. of growth.

During this report dissemination workshop, panelists discussed several strategic issues, including the next phases of work planned by BAM, as well as the World Bank’s support for this program.

LNT with MAP