Climate-related risks across EU and European Economic Area (EEA) banks remained broadly stable during the second half of 2025, while the availability and quality of climate data continued to improve, according to a report from the European Banking Authority (EBA).

The findings come from the EBA’s latest environmental, social and governance (ESG) risk dashboard, which monitors banks’ exposure to both transition and physical climate risks.

Between June and December 2025, the proportion of banks’ exposures to sectors considered major contributors to climate change remained broadly unchanged across the EU and EEA at 62 per cent.

Only a small number of jurisdictions recorded changes in their exposure shares during the period, leaving the overall transition risk profile broadly stable at EU level.

The countries and banks with the highest exposure to transition risk also remained largely unchanged.

The EBA said mortgage portfolios showed similar stability, although there were signs of gradual improvement in the underlying data used to assess their energy efficiency.

The share of mortgage exposures classified as highly energy efficient, meaning those with energy consumption of 100 kWh per square metre or less, increased slightly.

At the same time, the proportion of mortgage exposures for which no energy performance information was available declined marginally.

The share of exposures based on estimated energy performance scores also fell slightly.

The developments indicate that banks are gradually gaining access to more complete and reliable climate-related information for assessing mortgage portfolios, supporting more robust monitoring of climate risks.

Banks’ exposures considered sensitive to physical climate risks also remained unchanged across most jurisdictions.

However, the EBA highlighted significant differences between countries.

Average exposure shares ranged from below 10 per cent in some jurisdictions to more than 55 per cent in others.

The authority said the differences reflected variations in countries’ geographical, economic and sectoral characteristics, as well as differences in how physical climate risks are classified and assessed.

Overall, the findings for the second half of 2025 point to stable climate-related risk exposures across the EU/EEA banking sector, alongside incremental improvements in the quality and availability of climate-related reporting data.

The EBA’s ESG risk dashboard provides a regular overview of climate-related risks in the EU and EEA banking sector based on information disclosed by banks.

It is designed to monitor banks’ exposure to both transition risks, which arise as economies move towards lower-carbon models, and physical risks linked to the effects of climate change.

The dashboard also supports the identification of emerging vulnerabilities associated with climate change and the assessment of how effectively banks can monitor those risks.

The latest findings suggest that, while the underlying climate risks facing European banks have not changed substantially, improvements in data collection and reporting are gradually strengthening the sector’s ability to measure and monitor those exposures.