meta_id 3260205

On June 3, 2026, the Bank of Russia released a draft recommendation report for public consultation on conducting climate stress testing (CST) for transition climate risks in banks. The report, prepared by the Bank of Russia's Financial Stability Department, provides a comprehensive methodology for assessing how banks' credit portfolios may be affected by the energy transition and tightening climate regulation over a 20 to 25-year horizon. The draft recommendations address a critical gap identified in a 2025 Bank of Russia survey, where financial institutions cited the absence of data and methodologies for evaluating climate risks through stress testing. The proposed approach focuses exclusively on transition risks—the long-term financial impacts of decarbonisation and climate policy tightening—rather than physical climate risks. The methodology recommends that the largest banks, particularly systemically important credit institutions, conduct CST using two macroeconomic scenarios: a baseline scenario reflecting current policy trends and a stress scenario modelling accelerated global climate action. Banks should employ a static balance sheet approach, fixing their portfolio structure at the reporting date and projecting credit losses over five-year intervals without assuming dynamic portfolio adjustments or profit modelling. The recommendations require assessment of credit risk across corporate loans, corporate bonds, leasing portfolios, and factoring exposures, with particular focus on "brown" companies—those vulnerable to transition risks due to high carbon intensity or hydrocarbon production. The Bank of Russia will provide standardised macroeconomic scenarios based on Network for Greening the Financial System (NGFS) frameworks, though banks may develop their own science-based scenarios. Key outputs include expected credit loss (ECL) calculations measuring portfolio vulnerability and identifying optimal timeframes for strategic portfolio adjustments. The consultation period closes on July 8, 2026. Banks and stakeholders should submit responses to mmm1@cbr.ru, sidorovskiymo@cbr.ru, or ChigirevaDA@cbr.ru, addressing nine specific discussion questions regarding scenario design, portfolio assessment methodologies, and portfolio adaptation strategies.