Resource Database

Charting a New Climate is a report on physical climate risks and opportunities from Phase II of its Task Force for Climate-related Financial Disclosures (TCFD) Banking Programme with climate risk advisory and analytics firm, Acclimatise. The report, “Charting a New Climate”, provides a state-of-the-art blueprint to support financial institutions to navigate the changing physical climate risk landscape.

The TCFD Phase II banking pilot engaged thirty-nine global financial institutions on six continents. The programme empowered participants to identify, assess, and manage their climate risks and opportunities. Complete with case studies from participating banks, the report investigates leading practices on critical topics related to the physical impacts of climate change. The report also gives financial institutions an expanded toolbox with which to approach this important work. Beyond the tangible benefits to participating institutions, the insights contained within the report are also relevant for organisations across the finance sector.

The toolkit developed in Phase II provides a comprehensive way for organisations to consider their physical risks and opportunities and move from assessment to action.

The WWF Water Risk Filter is a practical, online tool that helps companies and investors to explore, assess, value and respond to water risks in their operations, supply chains and investments across the globe. Launched in 2012, the Water Risk Filter has become a leading and trusted source of water risk data for thousands of users – from multinational corporations and SMEs to financial institutions – which have used it to map and evaluate water risks using best available global and local data sets.

With the integration in 2020 of new climate and socio-economic pathway-based scenarios of water risk, the Water Risk Filter now enables companies and investors to perform TCFD-aligned scenario analysis to understand future water risks under different scenarios and inform long-term resilience planning and strategy.

IGCC undertook this project to better understand how Australian and New Zealand investors are using TCFD reporting, what they want to see more (or less) of from company TCFD reports and to identify the ingredients for effective reporting on scenario analysis. This report captures the views of investors who are reading and using company reporting to inform investment decisions, manage portfolio level risk and set strategies for transitioning to net zero emissions. It sets out what investors expect from the next generation of climate reports, how investors are using corporate reporting on risk, strategy and opportunity and includes recommendations for strengthening disclosure against scenario analysis. The report provides insight on investor priorities for the four pillars of the TCFD, and uses contemporary case studies to identify the gaps in current practice.

Full Disclosure: Improving corporate reporting on climate risk captures the views of investors who are reading and using company reporting to inform investment decisions, manage portfolio level risk and set strategies for transitioning to net zero emissions.

It sets out what investors expect from the next generation of climate reports, how investors are using corporate reporting on risk, strategy and opportunity and includes recommendations for strengthening disclosure against scenario analysis.

The report provides insight on investor priorities for the four pillars of the TCFD, and uses contemporary case studies to identify the gaps in current practice.

This practical example demonstrates how Verizon produced its first TCFD report and began implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). This example has been created by A4S and Verizon. Verizon’s work has included, developing scenario analysis, engaging investors, preparing gap analysis, and cross-functional, collaborative report building.

This case study is part of A4S’s guidance on supporting and implementing the TCFD recommendations.

This CFRF guide aims to help financial firms understand the risks and opportunities that arise from climate change, and provide support for how to integrate them into their risk, strategy and decision-making processes. As part of this, the guide considers how firms can plan for the impact of climate policies over different time horizons and assess their exposure to climate-related financial risks so that they can adapt their businesses in response. This overarching summary document sets out:

• Why it is important for financial services firms to consider climate change
• Background on the CFRF
• Information about the CFRF guide, how it can be used and summaries of the four chapters
• Next steps for the CFRF

This chapter on Risk Management provides practical guidance on how to address climate risks within financial institutions. It describes good practices but is also designed to act as a guide for those who have yet to fully consider the topic, where case studies are included they are consistent with this approach. It has been produced by the Risk Management Working Group of the Climate Financial Risk Forum.

The guide is aimed at banks, asset managers and insurers of all sizes. Some of the information in this guide may be more or less relevant for different firms depending on the scale and nature of their business and their risk profile.

This climate change Scenario Analysis chapter provides practical guidance on how to use scenario analysis to assess climate-related financial risks to inform firms’ strategy and business decisions. It was written by a cross-industry working group under the auspices of the Climate Financial Risk Forum.

This chapter is aimed at banks, asset managers and insurers of all sizes, and may be of interest to other institutions, such as pension schemes. It describes current industry good practices but is also designed to act as a guide for those firms who have yet to fully consider this topic.

The Disclosures chapter provides practical recommendations for financial institutions wishing to meet good practice expectations for public climate-related financial disclosures. It draws on good practice examples from industry as well as guidelines set by relevant and respected industry bodies. It has been produced by the Disclosures Working Group, which is part of the PRA/FCA Climate Financial Risk Forum, and is designed to be read in conjunction with outputs from other cross-industry working groups convened by the Climate Financial Risk Forum, in particular the Scenario Analysis and Risk Management chapters.

This chapter comprises a set of recommendations for how financial institutions and regulators can start to deliver a step change in aligning private sector financial flows with climate goals, both for increasing resilience to physical climate change and to supporting the transition to net zero, drawing on examples of good industry practices. In examining approaches to a capital allocation framework, new technologies, financial instruments and practices, it is designed to complement chapters describing components of a risk framework including climate change-related financial disclosures, scenario analysis and risk management.

To this end, the NGFS committed to publish the first-of-its-kind Guide on climate scenario analysis for central banks and supervisors. The forward-looking nature of climate risks and the inherent uncertainty about future events make it difficult to assess them using standard risk modelling methodologies. Scenario analysis offers a flexible ‘what-if’ methodological framework that is better suited to exploring the risks that could crystallise in different possible futures.

This Guide provides practical advice on using scenario analysis to assess climate risks to the economy and financial system. It is based on the initial experiences of NGFS members and observers and also aims to progress discussion on the methodologies used. While mainly aimed to central banks and supervisors, many aspects of the Guide might also prove informative to the wider community.

The Guide provides a four-step process. It recognises that this field is still relatively in its infancy and there is no universally agreed approach.

The NGFS Climate Scenarios (the scenarios) have been developed to provide a common starting point for analysing climate risks to the economy and financial system. While developed primarily for use by central banks and supervisors they may also be useful to the broader financial, academic and corporate communities. This document provides an overview of the key transition risks, physical risks and economic impact of climate change.