Why you should follow Norges Bank’s lead on managing risk in commercial real estate portfolios

Norges Bank, Norway’s central bank and manager of Norway's sovereign wealth fund, is sounding the alarm.

In their latest Financial Stability report (2025 H1), they highlight how banks are heavily exposed to climate and transition risk through commercial real estate (CRE), and how outdated, inefficient buildings could become a major financial liability.

This new report from one of the world's largest managers of capital is a very clear signal that banks need to pay attention to: Take. Transition Risk. Seriously.

It's not just Norges...

In a recent BankShift interview, Bengt Olsen, another industry leader and Chief Financial Officer at Sparebank 1 Nord-Norge, underscored these potential risks by stating, “Commercial real estate is typically one of the largest segments in a bank’s balance sheet, so it will hit banks hard if things go wrong there.” His remarks reinforce the urgency for banks to act before problems escalate.

Property is a climate and credit risk

This risk is so high because buildings account for nearly 40% of global emissions, and in Europe, the aging building stock is facing tightening climate regulations. From EU Taxonomy compliance to SFDR and CSRD disclosures, banks must now account for the carbon intensity of their property-backed loans.

As it's already been pointed out, CRE represents nearly half of banks’ lending. As the market shifts and regulations tighten, exposure to inefficient assets can quickly turn into stranded assets.

The smart move? Transition now

Norges Bank’s proactive stance shows that it's no longer enough to monitor CRE risk. It has to be actively managed and mitigated. Leading banks should integrate climate and transition risk into credit decisions and begin to scale green and sustainable lending to future-proof their portfolios.

How to fast-track profitable green lending

Netto is a cloud-based platform that helps banks transform high-risk buildings into profitable, low-carbon assets. By embedding real-time energy and climate data into credit workflows, Netto enables banks to:

• Identify risk hotspots:

• Assess upgrade potential:
  
  

• Originate green loans with confidence.

• Ensure compliance.
  
  

Whether you're a relationship manager, ESG lead, or risk officer, Netto gives you the tools to act on emissions and unlock sustainable revenue.

Want to see how Netto can help your bank lead the transition?

Book a free 15-minute demo here.