Morocco's banks are getting a boost in their climate risk preparedness, thanks to a joint effort between Bank Al-Maghrib (BAM) and the European Bank for Reconstruction and Development (EBRD). This program, launched in 2022, aims to strengthen the resilience of Moroccan banks in the face of growing climate-related pressures, such as droughts and variability, which are straining key sectors like agriculture and energy. The urgency of this initiative is underscored by the rapidly changing global context, marked by climate disruption, geopolitical tensions, and regulatory volatility. As Bank Al-Maghrib Director General Bouazza Abderrahim puts it, "We are currently operating in a highly unpredictable environment, and it is our responsibility as a central bank and supervisory authority to ensure that banks effectively manage risks, including those arising from climate change."
The program, supported by Frankfurt School of Finance & Management and RINA Consulting, equips Moroccan banks with the technical and strategic tools needed to identify, assess, and mitigate climate-related risks. This capacity-building initiative covers several modules on climate risk management and climate transition, emphasizing its importance as both a prudential and economic issue. Abderrahim warns that the absence of a methodological framework 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 designed to be adaptable, evolving with experience gained and evolving climate practices. The initiative is part of Morocco's broader strategy to develop climate finance by 2030, fostering coordination between regulators, financial institutions, and public authorities. According to Abderrahim, this strategy provides an appropriate framework for dialogue, encouraging 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 further emphasized the physical risks that necessitate the integration of more entities like banks. This program is a crucial step towards ensuring that Moroccan banks are prepared for the challenges posed by climate change, and it highlights the importance of collaboration between financial authorities and institutions in managing these risks effectively.
