Bank of Israel: Banks must take climate considerations into account when assessing the risks of business clients

In June 2026, the Bank of Israel directive on managing climate-related financial risks came into force.

The Directive explicitly states that climate risks – both physical and risks of transition to a low-carbon economy – are not a separate category, but directly affect all traditional types of financial risks: credit, liquidity, market, reputation and operational risks.

Banks are required to integrate climate factors into assessing their business model and financial strength – both their own and that of their clients.

For borrowing companies, the new directive means a significant expansion of information requirements on the part of banks. In addition to the questionnaires, businesses are expected to provide data on assets and their location, energy consumption and emissions, and exposure to climate risks in value chains.

In some cases, this information must be supported by public reporting or verified by external sources.