Physical climate risks for companies: ECB data live

Which physical climate risks hit companies in Germany

The European Central Bank calculates for Germany what share of corporate loans sits at locations that can be affected by river flooding: currently 16.3 percent of loan volume. The expected gross loss from river flooding is 3,328 million EUR per year, before insurance and collateral kick in. 27.2 percent of loans are at locations with critical water stress. The portfolio reference date is December 2024.

The year 2025 shows what that means on the ground. According to Copernicus, Europe is warming twice as fast as the global average and is the fastest-warming continent; in 2025 around 1.03 million hectares burned in Europe, the largest area on record. German insurers counted natural hazard losses of around 2.6 billion EUR in 2025, roughly 3 billion EUR less than in the flood year 2024. Globally, Munich Re puts 2025 losses at 224 billion USD.

For a business these are three different risks: the site (flooding, heat, water scarcity), the supply chain (low water on inland waterways, heat and drought at suppliers) and financing, because banks now factor exposure into their pricing.

What banks and reporting standards now require

Since June 2026 the ECB has applied a climate factor to collateral that banks pledge with it: corporate bonds from emission-intensive sectors lose up to 5 percent of their collateral value, and in July 2026 the ECB announced it would extend the factor to credit claims on companies. What the central bank discounts on collateral, the house bank passes on through loan terms.

In reporting, the climate risk assessment has remained mandatory: ESRS E1 requires the identification of physical and transition risks including scenario analysis, and in the VSME standard for small and medium-sized enterprises, module C4 asks about climate risks and adaptation measures. Anyone supplying a customer with reporting obligations gets the question in the supplier questionnaire, even without their own obligation.

There is a methodological framework: ISO 14091 describes how vulnerability, impacts and risks are assessed, using climate scenarios such as RCP 4.5 and RCP 8.5, which the ECB indicators also use.

How a site-level climate risk assessment works

The process is manageable in four steps:

1. Georeference sites and assets, including access roads, warehouses and critical equipment.
2. Assess climate hazards per site from open data (Copernicus, national weather services, state flood hazard maps) for today and two scenarios to 2050.
3. Estimate the vulnerability of processes, staff and supply chain: what fails for how long, and what the outage costs.
4. Prioritise measures by cost and avoided damage and document them in the report.

The table above shows why the last step pays off: backflow protection or shading often pays for itself with a single event.

My position: the number that counts in the conversation with your bank is not the climate scenario pathway but the expected damage per site and what you have done about it. That is exactly what the fixed-price climate risk analysis delivers: physical risks in two climate scenarios, transition risks under ESRS E1 and IFRS S2, and a report that banks and auditors can read.