The National Bank of Georgia (NBG) has completed its first climate stress test, marking a significant step in addressing climate-related risks within the country’s financial sector. Supported by the European Investment Bank’s Greening Financial Systems Technical Assistance Programme and EconLab experts, the two-year initiative assessed the impacts of acute physical risks, such as extreme weather, and transition risks tied to the shift toward a low-carbon economy.
The stress test evaluated key financial indicators, including Non-Performing Loan (NPL) ratios and capital adequacy, under various climate scenarios. The findings revealed vulnerabilities, with extreme precipitation posing major risks to NPL ratios and prolonged transition challenges straining capital adequacy. Nevertheless, the sector demonstrated resilience, bolstered by strong capitalisation.
This pioneering effort highlights the importance of proactive climate risk management and sustainable finance. By advancing its framework, the NBG is strengthening financial resilience while supporting Georgia’s low-carbon transition. Initiatives like the GEFF in Georgia are also vital, working with local partners to promote energy efficiency, renewable energy, and climate adaptation solutions.
The NBG’s first climate stress test sets a strong foundation for enhancing climate resilience in Georgia’s financial sector and supporting a sustainable economic future.
Read more: NBG climate stress test
Supported by
