Double trouble? Assessing climate physical and transition risks for the Moroccan banking sector

The purpose of this report is to better understand the impact of climate risks on Morocco’s banking sector. This includes understanding the banking sector’s exposure to sectors and regions that are vulnerable to climate physical and transition risks, as well as a quantification of climate impacts on banks’ balance sheets under different scenarios. This report also takes stock of the Moroccan banking sector’s current risk management practices and the supervisory response to climate-related financial risks.

Policy recommendations provided by the publication include:

• Developing additional supervisory guidance on climate-related and environmental risks can support enhancing the banking sector’s response to managing these risks;
• Future risk analysis work could consider improving the scenarios and modeling, for example, by exploring additional transmission channels to the economy and banking sector;
• Forward-looking guidance on climate and environmental policies can support longer-term decisionmaking and risk management practices.