Climate change poses the biggest long-term threat to the global economy. If no mitigating action is taken, global temperatures could rise by more than 3°C and the world economy could shrink by 18% in the next 30 years. This session will cover the key trends from regulators and industry with regards to Climate Risk subject

Climate alignment is the process of bringing the global economy’s emissions in line with 1.5°C temperature targets. Every actor in the global economy has a role to play in this transition. In practice, achieving net-zero emissions in the real economy will require scaling up low-carbon solutions while transitioning high-carbon assets and companies across global sectors. This includes carbon-intensive sectors where abatement remains especially difficult. As global climate ambition increases and net-zero commitments proliferate, climate alignment is establishing a new paradigm for the financial sector with redefined expectations around the role for financial institutions in advancing the net-zero transition.

Climate change is real. Or at least the measures being taken by Governments to combat climate change are most certainly real. The COP26 witnessed many heads of state committing very aggressive targets for their countries to reach net-zero emissions. But the goal – even if a few decades distant – will have profound implications for the global economy, requiring massive investment in its renewables sector and into a nascent hydrogen economy. It also implies the withering of a fossil-fuel sector that meets around 85% of the world’s primary energy demand. The finance sector will be central to this transition. and it requires new ways of thinking about lending and risk management.

Sustainability guidance and reporting frameworks play an important role in promoting transparency between organizations and their stakeholders. In recognition that climate change presents a significant risk to the global financial sector, which experts have estimated at USD$5 trillion in potential losses, TCFD, one such framework, is a guidance framework that helps companies disclose climate-related financial risks to investors, lenders, and insurers. TCFD recommendations are focused on governance, strategy, risk management, and metrics and targets.

TCFD, or Task Force on Climate-related Financial Disclosures, was created by the Financial Stability Board (FSB) in recognition that climate change presents a significant risk to the global financial sector, which they have estimated at USD$5 trillion in potential losses. The Task Force was created in December of 2015 as part of the finance industry’s response to the Global Financial Crisis, with a remit to identify and manage risks to the financial sector. The FSB is an international body that aims to protect the global financial system, so the focus on climate-related impacts to the sector is particularly significant. This body then reported its final report in 2017, which included the eleven recommended disclosures which guide TCFD reporting, TCFD is made up of 31 Task Force embers drawn from some of the world’s largest financial institutions across the G20.

As they seek to become effective managers of climate risk, banks need to quantify climate factors across the business and put in place the tools and processes needed to take advantage of them effectively. At the same time, they must ensure that their operations are aligned with the demands of external stakeholders. Five principles will support this transformation. They should be applied flexibly as the regulatory landscape changes.

Learn about the latest climate data analysis tools and how they can help us understand the full story of our relationship with the planet. A key step in the development of climate change stress testing is identifying the relationship between the climate risk factors, both transition and physical (e.g. carbon tax policy, temperature change) and financial information (e.g. provision).

Climate change poses the biggest long-term threat to the global economy. If no mitigating action is taken, global temperatures could rise by more than 3°C and the world economy could shrink by 18% in the next 30 years

Climate alignment is the process of bringing the global economy’s emissions in line with 1.5°C temperature targets. Every actor in the global economy has a role to play in this transition. In practice, achieving net-zero emissions in the real economy will require scaling up low-carbon solutions while transitioning high-carbon assets and companies across global sectors. This includes carbon-intensive sectors where abatement remains especially difficult. As global climate ambition increases and net-zero commitments proliferate, climate alignment is establishing a new paradigm for the financial sector with redefined expectations around the role for financial institutions in advancing the net-zero transition.

Sustainability guidance and reporting frameworks play an important role in promoting transparency between organizations and their stakeholders. In recognition that climate change presents a significant risk to the global financial sector, which experts have estimated at USD$5 trillion in potential losses, TCFD, one such framework, is a guidance framework that helps companies disclose climate-related financial risks to investors, lenders, and insurers. TCFD recommendations are focused on governance, strategy, risk management, and metrics and targets.

TCFD, or Task Force on Climate-related Financial Disclosures, was created by the Financial Stability Board (FSB) in recognition that climate change presents a significant risk to the global financial sector, which they have estimated at USD$5 trillion in potential losses. The Task Force was created in December of 2015 as part of the finance industry’s response to the Global Financial Crisis, with a remit to identify and manage risks to the financial sector. The FSB is an international body that aims to protect the global financial system, so the focus on climate-related impacts to the sector is particularly significant. This body then reported its final report in 2017, which included the eleven recommended disclosures which guide TCFD reporting, TCFD is made up of 31 Task Force embers drawn from some of the world’s largest financial institutions across the G20.

As they seek to become effective managers of climate risk, banks need to quantify climate factors across the business and put in place the tools and processes needed to take advantage of them effectively. At the same time, they must ensure that their operations are aligned with the demands of external stakeholders. Five principles will support this transformation. They should be applied flexibly as the regulatory landscape changes.

Learn about the latest climate data analysis tools and how they can help us understand the full story of our relationship with the planet.

A key step in the development of climate change stress testing is identifying the relationship between the climate risk factors, both transition and physical (e.g. carbon tax policy, temperature change) and financial information (e.g. provision).