BC says climate impacts reach the financial system through agriculture

The BC (Central Bank of Brazil) stated that extreme weather events continued to affect rural credit operations in 2025 and caused an increase in defaults in the agricultural sector.

According to the REF (Financial Stability Report), released this Monday (25), "institutions were impacted mainly in rural credit, with an increase in default rates".

According to the monetary authority, climate impacts continue to reach the financial system mainly through credit risk linked to the rural sector.

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In the BC's assessment, "the risk is concentrated in agriculture and industry, especially extractive activities". The report also states that, in agriculture, "high risk is fashionable in all 122 activities in the climate dimensions".

The document mentions among the extreme events recorded in 2025 storms in the south of the country, storms in the interior of São Paulo, floods and drought.

According to the BC, some financial institutions reported having used the experience of the extreme events of 2024 to improve climate risk management mechanisms.

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The report also points to a reduction in the number of financial institutions that said they had suffered impacts on their portfolios due to the adverse climate situation. The percentage fell from 44% in the previous survey to 21% in the survey carried out in 2026.

Even so, in the BC's analysis, credit risk continues to be the main channel for transmitting climate risks to the SFN (National Financial System).

The document highlights, however, that "default in agribusiness has multiple factors and that it is not possible to calculate how much is due exclusively to climate events."

Source: CNN