Climate-related Risks

The Central Bank’s Climate Observatory offers an annual overview of climate science trends, progress towards decarbonisation, and the evolving financial risks. By integrating Central Bank analytics with third‑party data sources, the Observatory equips stakeholders with the metrics needed to understand climate‑related risks. It represents the most comprehensive, evidence‑based snapshot currently available to inform decision‑making, and will continue to be strengthened as methods and data improve.

Measurement of Climate-related Financial Data

The Central Bank’s Climate Observatory provides annual updates on climate-related financial and non-financial metrics, combining Central Bank analytics and third-party data sources. The Observatory serves as an annual monitor of climate trends, progress towards decarbonisation and evolving financial risks.

Climate change threatens the resilience of the financial system, households, businesses and government finances through physical hazards (such as floods) and transition costs (such as energy retrofits). The real economy impacts affect banks (e.g. borrower repayment ability and collateral values), insurers (e.g. losses, pricing and coverage), and investors (e.g. asset valuations). The financial sector also plays an important enabling role in funding and providing financial products that support the actions needed to build climate resilience and transition to a net zero economy.

Climate Observatory: full report (PDF)

Climate Observatory (released January 2026) | pdf 4532 KB

Key trends (January 2026 Update)

  • The economic and financial costs of climate change are already emerging. A quarter of all weather and climate‑related economic losses in Europe since 1980 occurred in the past four years alone.
  • Financial sector: Carbon intensity in investment, insurance and pension funds has declined, broadly aligned with euro area trends. Green mortgage originations are about 44% of new lending, however banks’ corporate loan books have become more carbon intensive, exceeded euro area averages. Around half of corporate lending is to economic sectors with elevated transition risk. Current analysis shows roughly 6% of domestic business loans lie in flood risk areas, rising to 12–16% under future scenarios.
  • Ireland’s transition: Uptake of retrofits, electric vehicles and renewables is increasing and the carbon intensity of electricity generated has roughly halved over the past decade. Nonetheless, EPA projections highlight that Ireland is not on track to meet its 2030 statutory target under existing measures. The Land Use, Land Use Change and Forestry (LULUCF) sector remains a net emitter due to declining forest carbon sinks and emissions from grasslands and wetlands.
  • Global climate state: Atmospheric CO2 and global temperatures have reached unprecedented levels. Current trajectories indicate global temperatures are likely to exceed the Paris Agreement’s 1.5°C threshold in the early 2030s, raising the risk of triggering several climate tipping points.
  • Global technology and policy: Clean energy investment surpassed fossil fuel investment in 2025 and deployment of renewables, batteries and EVs is accelerating.

The below charts present a sample of key trends from this year's observatory.

Climate Observatory Reports