European Central Bank climate chief Irene Heemskerk said a new pattern is taking shape, with the cumulative impact of extreme weather shocks evolving into an independent risk. According to Sina Finance, she said the slow-moving, long-term effect can trigger secondary impacts, disrupt supply chains, and hurt labor productivity.

BlackRock executive Louise Kooy-Henkel recently issued a similar warning, saying long-term climate risk is drawing increasing attention. According to Sina Finance, she said markets have not yet priced in this type of risk, while economists have warned that Europe’s GDP will come under pressure from the knock-on effects of climate-change-driven extreme weather this year.

Heemskerk said the ECB has set a maximum haircut of 5% on collateral banks use to obtain liquidity. According to Sina Finance, the policy took effect in June for transition risk on bonds and will expand to credit claims next year.

Heemskerk also said that if more and better data become available, the ECB will reassess its approach. According to Sina Finance, she added that the central bank will continue to do what it can and coordinate with willing parties.