Climate Change Challenge

Climate change poses risks to our economy and the financial sector. Assessing how climate change and the transition to a carbon-neutral society affect our economy is fundamental to incorporate climate change considerations in the policy framework of central banks and regulators. A greater understanding of physical risks and their impact ultimately helps keep prices stable and the banking system safe. Data scientists and analysts have a heroic role to play in laying the groundwork for research.

Climate data represents a challenge in itself. Working with this data means we rely on many different sources and types; it appears less mature due to varied standards, inconsistencies, and the absence of critical data. But this environment improves thanks to new regulations, modern analytics tools and technology. The Copernicus Climate Change Service, established by the European Commission, is an authoritative source of information for the inclusion of reliable climate data into policies and actions. In January 2023, the ECB published first indicators that helped “narrowing the climate data gap”. It is an important first step in providing high quality tools to measure and monitor climate-related risks to the euro area economy. 

Furthermore, some data sets require special training to work with; and to exploit the potential of data, we need to be able to process it. From machine learning to data visualisation, data science techniques are being used to study the effects of climate change on economic and financial systems. Enhancing the knowledge and skills in handling climate data, which remains largely new to staff members in National Central Banks and National Competent Authorities, is one exceptionally high impact method to foster capabilities across the disciplines.

The Climate Change Challenge addresses all these obstacles and brings together different expertise and strands of work across EU institutions. In the spirit of collaboration, the event is co-organised by the ECB, Banque de France, Banca d’Italia, the Copernicus services from the European Commission