Soledad Núñez: Climate risk and sustainable finance - bridging policy, research and practice
Speech by Ms Soledad Núñez, Deputy Governor of the Bank of Spain, at the High-Level Conference "Climate risk and sustainable finance: bridging policy, research and practice", jointly organised with the Network for Greening the Financial System (NGFS), the Centre for Economic Transition Expertise (CETEx), and the TPI Global Climate Transition Centre, both at London School of Economics, Madrid, 25 March 2026.
Good morning, distinguished guests,
It is a pleasure to welcome you to the Banco de España for this High-Level Conference on "Climate Risk and Sustainable Finance: Bridging Policy, Research and Practice". A joint conference with the Network for Greening the Financial System (NGFS), the Centre for Economic Transition Expertise (CETEx), and the TPI Global Climate Transition Centre, both at London School of Economics. We sincerely thank these institutions for their valuable collaboration and contribution.
And I would like to thank all participants, in person and online from central banks, supervisors, academics, policy-makers and practitioners, for joining us today. Your commitment and expertise make gatherings like this not only possible, but truly meaningful. We meet at a time when the global context makes our work more urgent than ever. Climate change is no longer a distant or theoretical threat-it is a present and accelerating force shaping global economic and financial conditions. We are witnessing a sharp increase in physical risks with remarkable consequences from extreme weather events. At the same time, transition risks are becoming more complex, driven by rapidly evolving regulation, technological shifts, and rising expectations on transparency and accountability.
In today's increasingly complex geopolitical landscape, we are reminded of how deeply interconnected our world has become. These challenges underscore an urgent truth: the climate crisis does not pause political tensions, nor does it respect borders. More than ever, we must remain committed to advancing climate action, strengthening international cooperation, and accelerating the transition to a resilient, sustainable future. This requires embracing a long-term vision, as Mark Carney, former Governor of the Bank of England, reminded us with his idea of the 'tragedy of the horizon,' ensuring that today's decisions reflect the risks and opportunities that will unfold over the coming decades.
Extreme weather events are generating mounting economic and financial costs. These impacts translate into growing financial-sector vulnerabilities: higher credit risk in affected industries, increased insurance liabilities, and fiscal pressures that can weaken sovereign creditworthiness-all of which heighten systemic risk and challenge financial stability frameworks.
At the same time extreme weather events do not affect all regions or countries in the same way, and their economic and financial consequences vary widely depending on geographic exposure, structural vulnerabilities, and levels of development.
Moreover, the distinction between local and national impacts is crucial: while a flood or storm may devastate a specific region's productive capacity, employment, or credit conditions, the aggregate national effect may appear smaller-masking deep localized damage and financial-sector stress concentrated in the affected areas. For example, the October 2024 DANA in Valencia Spain, caused economically severe local losses for households and firms in the affected areas, though its overall impact on Spain's broader economy remained limited. From a financial stability perspective, the Banco de España concludes that, despite causing severe local damage and some deterioration in credit quality in the affected areas, had a non-systemic impact thanks to the relatively small share of exposed credit and the mitigating measures implemented by public authorities.
Recognizing this heterogeneity is essential for designing targeted adaptation policies and financial-stability frameworks that account for regional disparities and country-specific vulnerabilities.
In this context, strengthening our climate agenda is essential for boosting competitiveness and building greater resilience across our economies. Competitiveness and resilience are mutually reinforcing: the more resilient we become to environmental, energy, and geopolitical disruptions, the more competitive we are; and the more competitive we are, the better equipped we become to sustain long-term climate roadmap.
And for central banks and supervisors, this reality poses a fundamental challenge: we must ensure that the financial system remains resilient in the face of climate-related shocks. And to do so, we must deepen our understanding of how these risks propagate, how they interact with macroeconomic trends, and how they can impact financial stability. In this sense, advancing the knowledge, data, and analytical tools needed to assess climate risk is not optional-it is essential for fulfilling our mandates. And taking into account that today's challenges extend far beyond climate change alone, encompassing the accelerating loss of nature and biodiversity-crises that are deeply interconnected and must be addressed together.
Today's agenda reflects this imperative. Throughout the day, we will hear several presentations addressing both climate change mitigation and adaptation. While mitigation remains essential to reducing future risks, today's discussions will place particular emphasis on adaptation. This is a dimension that has become crucial for strengthening resilience, protecting vulnerable communities, and ensuring the stability of our economic and financial systems in the face of increasingly frequent and severe climate-related events.
In this regard, reliable, comparable, and sufficiently granular climate data is the foundation of any rigorous climate assessment. Without it, neither policy-makers nor supervisors can fully anticipate the risks ahead or design credible, effective responses. Strengthening our analytical capacity is therefore essential to improving the quality and precision of our decisions. For that reason, exploring how better data and methodologies can support more informed and forward-looking policymaking.
At the same time, a key part of this effort involves deepening our understanding of how physical climate risks will shape economic activity in the years to come and evaluating the credibility of transition plans. These dimensions are central to ensuring that financial institutions properly integrate climate-related risks into their strategies and operations. And central banks themselves have an important role to play in the way we manage our own portfolios. Integrating climate considerations into portfolio management-while remaining fully aligned with our mandates-offers a concrete opportunity to lead by example.
Across all the sessions runs a common leitmotif: collaboration. No single institution, no single country, can address these challenges alone. We must strengthen the bridges between research and policy, between public and private sectors, and across jurisdictions. Only through coordinated efforts-rooted in sound science, rigorous analysis, and a long-term perspective-can we ensure that the financial system supports a sustainable and orderly transition. As the Network for Greening the Financial System has stressed, the cost of inaction far exceeds the cost of an orderly transition: delaying climate measures not only raises transition costs but also amplifies the economic and financial risks posed by increasingly severe climate-related shocks.
Let me close by expressing my gratitude once again for your presence and engagement. I am confident that today's discussions will not only deepen our understanding but also inspire concrete progress in the months ahead.
Thank you very much.
Facts Only
Soledad Núñez, Deputy Governor of the Bank of Spain, spoke at a conference titled "Climate risk and sustainable finance: bridging policy, research and practice" in Madrid on March 25, 2026.
The conference was jointly organized by the Bank of Spain, the Network for Greening the Financial System (NGFS), the Centre for Economic Transition Expertise (CETEx), and the TPI Global Climate Transition Centre at the London School of Economics.
Participants included central bankers, supervisors, academics, policymakers, and practitioners, both in person and online.
Núñez highlighted climate change as an immediate and accelerating threat to global economic and financial conditions.
Extreme weather events, such as the October 2024 DANA flood in Valencia, Spain, were cited as examples of localized economic and financial damage.
The Banco de España concluded that the Valencia flood had a non-systemic impact due to the small share of exposed credit and public mitigation measures.
The conference agenda included discussions on climate change mitigation and adaptation, with a particular emphasis on adaptation strategies.
Núñez emphasized the need for reliable, granular climate data to support rigorous risk assessments and policymaking.
Central banks were noted to have a role in integrating climate considerations into portfolio management while aligning with their mandates.
The event aimed to strengthen collaboration between research, policy, and practice across public and private sectors.
Núñez referenced Mark Carney’s concept of the "tragedy of the horizon" to stress the importance of long-term planning in climate action.
The Network for Greening the Financial System (NGFS) was cited as advocating for the cost of inaction on climate change exceeding the cost of an orderly transition.
Executive Summary
Soledad Núñez, Deputy Governor of the Bank of Spain, delivered a speech at a high-level conference on climate risk and sustainable finance in Madrid on March 25, 2026. The event was co-organized with the Network for Greening the Financial System (NGFS), the Centre for Economic Transition Expertise (CETEx), and the TPI Global Climate Transition Centre at the London School of Economics. Núñez emphasized the urgent need to address climate change as an immediate and accelerating threat to global economic and financial stability, citing rising physical risks from extreme weather events and complex transition risks driven by regulation, technology, and transparency demands. She highlighted the uneven impact of climate events across regions, noting that localized disasters like the October 2024 DANA flood in Valencia caused severe local damage but had limited systemic effects on Spain’s broader economy. The conference focused on bridging policy, research, and practice, with discussions on mitigation and adaptation strategies, the importance of granular climate data, and the role of central banks in integrating climate considerations into financial systems. Núñez underscored the necessity of international cooperation and long-term planning to manage climate risks effectively.
The speech also addressed the interconnected challenges of biodiversity loss and the need for resilient financial systems capable of withstanding climate-related shocks. Núñez stressed that central banks must enhance their analytical tools to assess climate risks and ensure financial stability, while also leading by example in portfolio management. The event aimed to foster collaboration among policymakers, researchers, and practitioners to accelerate a sustainable and orderly transition to a low-carbon economy.
Full Take
**STEELMAN:** Soledad Núñez’s speech presents a compelling case for urgent climate action within financial systems, grounded in observable economic and financial risks. The argument is strengthened by its acknowledgment of regional disparities in climate impacts, the need for granular data, and the role of central banks in leading by example. The emphasis on adaptation alongside mitigation reflects a pragmatic approach to addressing immediate vulnerabilities while planning for long-term transitions. The call for international cooperation and collaboration across sectors aligns with widely recognized challenges in climate governance.
**PATTERN SCAN:** The narrative employs a mix of authoritative appeals (citing institutions like NGFS and figures like Mark Carney) and urgency framing to underscore the stakes of inaction. While the tone is measured, the repeated emphasis on "urgent" and "accelerating" risks could be seen as a form of *ARC-0024 Ambiguity*—where the severity of climate risks is highlighted without proportional discussion of mitigation feasibility or trade-offs. The focus on systemic financial risks, while valid, might also reflect *ARC-0043 Motte-and-Bailey*—where the broader claim (climate action is essential) is supported by narrower, uncontroversial points (financial stability requires risk assessment).
**ROOT CAUSE:** The paradigm driving this narrative is the integration of climate risk into financial stability frameworks, a shift from viewing climate change as an environmental issue to a systemic economic threat. The unstated assumption is that financial systems can and should internalize climate risks without fundamental conflicts with their mandates—a premise that may overlook political or structural barriers to implementation.
**IMPLICATIONS:** For human agency, the speech positions central banks and financial institutions as key actors in climate resilience, potentially expanding their role beyond traditional mandates. The beneficiaries of this approach include policymakers and institutions advocating for proactive climate measures, while costs may fall disproportionately on regions or sectors with higher exposure to transition risks. Second-order consequences could include increased regulatory burdens on financial institutions or unintended market distortions from climate-related policies.
**BRIDGE QUESTIONS:**
1. How might the emphasis on adaptation over mitigation shift priorities in climate finance, and what trade-offs does this entail?
2. What evidence would challenge the assumption that central banks can effectively integrate climate risks without mission drift?
3. How do regional disparities in climate impacts affect the feasibility of global cooperation, and what mechanisms could address these inequities?
**COUNTERSTRIKE SCAN:** A coordinated influence campaign pushing this narrative might amplify the urgency of climate risks while downplaying implementation challenges, using authoritative endorsements to preempt criticism. However, the speech itself does not exhibit signs of manipulation—it presents a reasoned argument with acknowledgment of complexity and calls for collaboration, which aligns with legitimate policy discourse rather than a covert agenda.
Patterns detected: *ARC-0024 Ambiguity*, *ARC-0043 Motte-and-Bailey*
Sentinel — Human
The speech by Ms. Soledad Núñez, Deputy Governor of the Bank of Spain, is likely human-written. It demonstrates a personal voice, strong emotional engagement, and lacks obvious signs of mechanical writing or template matching.