meta_id 2965991

On March 12, 2026, Michael Theurer, Member of the Executive Board of the Deutsche Bundesbank, delivered remarks at a Research Conference on Climate- and Nature-Related Risks in the Economic and Financial System, co-hosted by the Deutsche Bundesbank, Banque de France, Paris School of Economics, and Toulouse School of Economics in Paris. Theurer highlighted that the Paris Agreement's 1.5-degree Celsius warming target is now virtually unattainable under most climate models, with current carbon budgets depleted within three years at existing emission levels. This reality necessitates a shift in focus from mitigation alone to adaptation strategies. The Bundesbank emphasised that physical climate risks—including increased frequency of heatwaves, droughts, floods, and rising sea levels—will materialise regardless, requiring financial systems to prepare for a warmer, more volatile climate. The address identified critical adaptation challenges for banks, including incomplete risk mitigation despite recognised hazards, governance gaps between identified risks and financial buffers, and systemic risks from correlated climate shocks across supply chains. A recent study of 50 global banks found 88 percent inadequately address adaptation risks. The Bundesbank noted that adaptation financing remains severely underfunded, with only 4 percent of global climate finance directed toward adaptation. Beyond climate, Theurer stressed the financial implications of biodiversity loss and ecosystem service degradation. A Deutsche Bundesbank analysis of 1,200 German banks covering €1.7 trillion in corporate lending found approximately half of banks' loan volumes exhibit high dependency on at least one ecosystem service, with water-based services particularly critical. The Bundesbank committed to developing methodologies for analysing physical and transition risks, including adaptation-related aspects, and integrating these into supervisory frameworks. The authority emphasised that financial institutions must simultaneously manage climate risks and finance adaptation solutions to build a resilient economy.