The objective of the 2021 BES is to test the resilience of the current business models of the largest banks, insurers and the financial system to the physical and transition risks from climate change. The exercise will provide a comprehensive assessment of the UK financial system’s exposure to climate-related risks and therefore the scale of adjustment that will need to be undertaken in coming decades for the system to remain resilient. To this end, the BES will focus on sizing risks, rather than testing firms’ capital adequacy or setting capital requirements. It will also allow the Bank to examine how major financial firms expect to adjust their business models, and what the collective impact of these responses on the wider economy might be. Finally, the BES will provide a vehicle for financial firms to identify and address data gaps and to develop cutting-edge risk management approaches.
This discussion paper sets out the Bank’s proposed framework for conducting the 2021 BES. Given the unique nature of climate-related risks, the 2021 BES will be a novel exercise for the Bank and for participating firms.
The Science Based Targets initiative (SBTi) drives ambitious climate action by mobilising companies to set science-based targets (SBTs), GHG reduction targets that are aligned with what climate science tells us is required to meet the goals of the Paris Agreement. Since its launch in 2015, the SBTi has made significant progress against its goal of making science-based target setting standard business practice.
With investors increasingly aligning towards companies that understand their climate risks, it’s more important than ever for organisations to get a firm grip on the framework. Three quarters of investors surveyed for the TCFD Status Report 2019 indicated that they are now using the TCFD disclosures when investing.
So the key questions are: are the TCFD recommendations really that hard? Why are some companies hesitant to adopt? And what has worked for those that have already started on this journey of reporting their climate risks and opportunities?
Climate change is a systemic threat to the financial system and presents a material risk to the investment returns of long-term asset owners and their underlying superannuation members. Central banks and national financial regulators are increasingly warning of the financial risks of climate change. This policy brief outlines why investors have a clear legal obligation to manage climate risks. In addition, it outlines how financial regulators around the world are now requiring a proactive response from investors and companies to manage climate related financial risks in order to ensure financial stability.
According to a new report from BCS Consulting, more than a third of the world’s top 75 banks have still not declared their support for the Task Force on Climate-related Financial Disclosures (TCFD), an initiative to get companies to disclose clear comparable and consistent information about the risks and opportunities presented by climate change.
In this podcast episode, GARP Risk Institute Co-President Jo Paisley speaks with Hector Fontaine, Sustainable Finance Lead at BCS Consulting about the key findings of the report, what best practices are emerging around climate risk, and how this could conceivably impact future regulation.
For the GARP Risk Institute’s Global Survey on Climate Risk Management for Financial Firms, please see: https://www.garp.org/#!/garp-risk-institute/climate-risk-management-survey
MIT held a workshop, “Climate Scenarios in Corporate Disclosure,” on November 28 and 29, 2018, that gathered participants from oil and gas companies, global scenario producers, the financial community, and NGOs together with other experts to discuss climate‑related scenarios and their use in financial disclosures. The workshop was held under the Chatham House Rule. This white paper is meant to reflect and build upon the content of the discussions held at the workshop.
This report represents a high-level summary in a plain-English format of the detailed legal analysis contained in four country papers produced by the CCLI on directors’ duties and climate risk in Australia, Canada, South Africa and the UK. The analysis is undertaken at a high level, focusing on areas of commonality, and does not purport to provide a comparative or exhaustive examination of the relevant laws in the four jurisdictions. It provides an overview of the conclusions that are substantively mirrored across each jurisdiction and identifies material divergences.
The purpose of this report is to provide a progress assessment on banking sector disclosures specifically, considering the critical role that banks need to play as enablers of capital to fund the transition to a low-carbon economy.
Investment to support corporate activities to address climate change (green investment) using the information disclosed is expected to increase, along with the future progress of disclosure. In doing so, it is important that investors and other stakeholders appropriately evaluate and utilize information disclosed by companies for their investment decisions.
Following this line of thought, the Japan TCFD Consortium has received inputs and conducted discussions with members through its steering committee and information utilization working group, and have prepared the “Green Investment Guidance” which provides commentaries on perspectives needed by investors and other stakeholders when understanding the information disclosed based on the TCFD recommendations.
By offering how-to guidance, this publication aims to help companies enhance the robustness, consistency, comparability, and utility of TCFD implementation and reporting through SASB and CDSB’s market-tested frameworks, standards and resources. Regardless of whether an organization has a sophisticated approach to managing climate risks and opportunities or is just getting started, it can use this guidance to move forward in supporting improved decision-making, enhanced market resilience, and more sustainable economic growth. This guidance was translated by EY Japan.