FRANKFURT. (Reuters). The European Central Bank has launched a stress testing on Thursday to evaluate how ready banks are for dealing with shocks resulting from climate change, the bank said in a statement.

Since long, the ECB warned eurozone lenders that they are not meeting their climate risk management goals. It repeatedly urged them to adapt to its standards faster.

“This is not a pass or fail exercise, nor does it have direct implications for banks’ capital levels,” the ECB said. It aims “to identify weaknesses, best practices, and the challenges that banks face in managing climate-related risks.”

However, the results from the test will still be part of a wider review known as the Supervisory Review & Evaluation Process. This could indirectly affect capital requirements.

Results of the exercise are expected to be released in July.

It stated that the ECB would target certain asset classes more susceptible to climate risks than overall bank balance sheets.

The report will examine the income and sources of exposures that are most at risk, combing traditional loss projections with new qualitative data.