Nicosia, Cyprus. Cypriot banks’ exposure to climate-sensitive sectors remained below the European average and ranked among the lowest in the EU, according to the latest European Banking Authority (EBA) ESG risk dashboard. Data for the second quarter of 2025 put exposure at 59%.
Cyprus exposure in Q2 2025
The EBA dashboard showed that banks in Cyprus recorded exposure of 59 per cent to non-financial corporations operating in sectors that significantly contribute to climate change. This was the eighth lowest rate in the EU and below the European average of around 62 per cent.
The EBA said the latest update confirmed continued stability across key climate-related risk indicators, broadly in line with previous releases, and provided authorities and institutions with background information to manage environmental risks.
Sector breakdown in Cypriot bank portfolios
Within Cypriot banks’ portfolios, the largest concentration related to real estate activities at 16.7 per cent. This was followed by retail and wholesale trade and vehicle repair at 16.4 per cent, industry at 11.1 per cent, transport and storage at 9 per cent, and construction at 7.5 per cent.
European comparisons
Across Europe, exposures remained elevated due to the weight of climate-sensitive industries in corporate lending portfolios.
The highest levels were recorded in Denmark at 81 per cent, Finland at 80 per cent, Estonia at 79 per cent, Norway at 79 per cent, Austria at 78 per cent, Bulgaria at 78 per cent, Latvia at 77 per cent, and Italy at 76 per cent.
At the other end of the scale, Luxembourg reported 13 per cent, Slovakia 27 per cent, and Malta 41 per cent.
ECB fine and data quality trends
Separately, the European Central Bank (ECB) recently fined Credit Agricole €7.6 million for failing to comply with supervisory decisions on climate and environmental risks.
The report also showed improving environmental data quality. Real-estate-backed exposures recorded stronger energy-performance information, while banks’ reliance on proxy indicators declined by around 10 percentage points since December 2023, indicating better coverage and more reliable sustainability assessments.
However, measurements of physical climate risk remained uneven across jurisdictions, reflecting methodological differences and the complexity of assessing environmental risks across diverse geographies.
What do you think should be prioritised to improve consistency in physical climate risk measurements across jurisdictions?
