Title: Climate Stress Tests: The ACPR's pilot exercise for the credit sector

Abstract: As the impacts of climate change are getting grimmer and the need to change the curve has become essential, the banking system as a whole ought to step in the process of energy transition. For these reasons, various Central Banks have decided to carry out these so called Climate Stress Tests, as a way to raise awareness on the banking system's role in the transition. One of them has been conducted this year, led by the ACPR (French banking supervisory entity) on the French banking sector. This exercise has highlighted the need to reconstruct and re-think traditional Stress testing models and raised new modelling challenges, which are a sectoral approach and a longer horizon of projection, resulting in a need for a dynamic balance sheet.