Energy ratings and flood risks likely to be part of BoI’s climate change assessment
BANK of Ireland has revealed that it is identifying which of its activities and assets are exposed to climate change risks, as part of a process to integrate them into the risk frameworks of its business.
Banking sources said that depending on the extent of the analysis, it could take account of increased flood risks from severe weather events, and the BER ratings of properties on which mortgages are secured.
How the value of petrol and diesel cars and other vehicles are affected by the transition to hybrid and electric vehicles, and the consequences of associated financing of about €3bn by banks here were also pointed to in a speech given by Vasileios Madouros, the Central Bank’s director of financial stability, in February.
Bank of Ireland, which is led by Francesa McDonagh, declined to go into further detail, other than to say that its work is part of its commitments to the United Nations Principles for Responsible Banking and the Task Force on Climate-related Financial Disclosure.
The news emerges as a group of scientists led by Britain’s Met Office warned this week that the recent heatwave in the Arctic, where temperatures rose to 38C, was caused by manmade climate change. This is likely to exacerbate the melting of the Greenland Ice Sheet, they added, which could result in a sea level rise of up to six metres.
In May, Dublin-based data company
Gamma Location Intelligence predicted up to 70,000 homes along Ireland’s coastline and riverbanks could be at risk from flooding caused by climate change over the next 30 years.
Gamma’s report, prepared for a number of insurers, said that in a worst-case scenario, sea levels could rise by between three and six metres by 2050. Properties in Dublin, Louth and Clare would be most at risk, as well as parts of Limerick, Galway and Cork city centres.
Irish banks held €98bn of residential mortgages on their books at the end of March, according to the most recent figures available from the Central Bank. “Irish banks are heavily exposed, with around two-thirds of their loan exposures secured on property,” said Madouros.
“Insurance Ireland members have paid out about €1.6bn on major weather-related events over the past two decades,” a spokesman for the insurers’ industry group said.
Lisa Ryan, assistant professor of energy economics at UCD, said that banks are still in the early stages of assessing climate risks, with the European Central Bank having several initiatives under way, taking account of effects such as gradual changes in temperature and rainfall, rising sea levels, as well as droughts, floods and hurricanes.