ACPR launches second climate stress test

Written by Adam Cadle

07/07/2023

The Autorité de contrôle prudentiel et de resolution (ACPR) has launched its second climate stress test covering the French insurance sector.

This second exercise in the climate stress test proposes methodological changes resulting from discussions with insurers in 2022. A short-term horizon (2027) is added to the long-term horizon (2050) to explore scenarios that combine physical and transition risks in a consistent manner. The impact of these risks is measured on the assets, liabilities, balance sheet balance, and for the short-term scenario, solvency.

The results will be the subject of a public report published in 2024 presenting the market-wide impacts of the scenarios, and will continue to foster exchanges with undertakings thereafter.

“Stress tests have become essential tools for financial institutions to measure the impacts of climate change on their business model, their capacity to absorb shocks and thus refine their climate risk management strategy, particularly in view of the development of their transition plans. We are following a supportive approach, as this exercise will have no impact on the capital requirements of participating undertakings,” Nathalie Aufauvre, Secretary General of the ACPR, said.

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