In a significant development for Morocco's financial sector, the Bank Al-Maghrib (BAM) and the European Bank for Reconstruction and Development (EBRD) have concluded a program designed to fortify Moroccan banks against the escalating challenges posed by climate change. This initiative, launched in 2022, is a crucial step in addressing the growing climate-related pressures that are putting immense strain on sectors like agriculture and energy, which are heavily reliant on bank financing. The urgency of this program is underscored by the rapidly changing global landscape, marked by climate disruption, geopolitical tensions, and regulatory volatility, as highlighted by Bank Al-Maghrib Director General Bouazza Abderrahim.
Abderrahim's statement, "We are currently operating in a highly unpredictable environment...it is our responsibility to ensure that banks effectively manage risks, including those arising from climate change," underscores the critical role of financial authorities in navigating these turbulent times. The program, supported by the Frankfurt School of Finance & Management and RINA Consulting, equipped Moroccan banks with the technical and strategic tools necessary to identify, assess, and mitigate climate-related risks. This capacity-building initiative covered several modules on climate risk management and climate transition, emphasizing the growing recognition of climate risk management as both a prudential and economic issue by banks.
The absence of a methodological framework, Abderrahim warned, could expose banks to significant losses on assets sensitive to these risks. In response, BAM has introduced a regulatory framework requiring banks to progressively integrate climate risks into their governance and risk management processes. This framework is not static; it continues to be strengthened and adapted based on the experience gained and evolving climate practices. The initiative is a pivotal part of Morocco's broader strategy to develop climate finance by 2030, which aims to foster coordination between regulators, financial institutions, and public authorities. According to Abderrahim, this national strategy provides an appropriate framework for dialogue to encourage the economic fabric to engage in the transition toward decarbonized projects.
The recent events in Morocco, including floods in the country's northern provinces, consecutive years of drought, and the 2023 Al Haouz earthquake, have served as stark reminders of the physical risks that underscore the need for the integration of more entities like banks. This program is a testament to the proactive approach of Moroccan authorities in addressing the challenges posed by climate change, ensuring the stability and resilience of the financial sector in the face of an increasingly volatile environment.
