Resource Database

Financial sector risk leaders, risk managers, and board risk committees are increasingly aware of climate-related legal risks to financial institutions. In Canada, the Office of the Superintendent of Financial Institutions (OSFI) has identified liability risk as a source of climate-related financial risk facing deposit-taking institutions, insurance companies, and pension funds. These risks include regulatory orders and/or fines, enforcement of securities disclosure and financial supervisory capital adequacy requirements, and lawsuits by investors alleging the directors failed in their fiduciary duties to manage material risk, among others.

Globally, financial risk arises for financial institutions as investors, government authorities, and civil society groups seek monetary damages from companies for alleged misrepresentation, breach of directors’ duties, tort/nuisance liability, or violation of securities laws for failure to disclose material financial risks. In some cases, firms are being held to account for historic and current contributions to global warming.

This executive note briefly examines a number of different types of liabilities that may arise for financial institutions, provides illustrative case examples, and offers ideas for effective governance.

In this edition of our Climate Risk webcast series, Jason Eis, Executive Director of Vivid Economics, addresses the transition risks likely to arise from the process of adjusting toward a lower carbon economy.

This guide looks to support financial institutions in navigating the technical questions they may ask themselves when assessing their portfolio for alignment with a Net Zero scenario and answer some of the key technical challenges which will support the implementation of robust, sciencebased strategies.

This publication is the ninth edition of the research published annually by CSRone since 2013. Each year, the research team collects all corporate sustainable development reports, corporate social responsibility reports, or environment safety reports (collectively, hereinafter referred to as the “sustainability reports”) published across Taiwan, and establishes the analysis indicators according to the latest trends in sustainability and registers the collected information in the database accordingly. Furthermore, every year in March the team publishes the latest key findings as source of reference for industry experts, government officials, and academia in Taiwan.

A new report from the Science Based Targets initiative (SBTi) prepared by the United Nations Global Compact and CDP, takes stock of corporate climate ambition in the Group of Seven (G7), an intergovernmental organization consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Provides guidance to companies on how to set, validate and report on science-based targets for GHG emissions and sectoral decarbonisation towards the ambitions of the Paris Agreement.

According to a new legal opinion by Randy Bauslaugh, pension funds have a duty to understand and manage the financial risks and opportunities that climate change poses to funds and beneficiaries. Mr. Bauslaugh identifies the legal obligations of pension fiduciaries to consider and manage climate risks, as with any foreseeable financial risk, and discusses the practical approaches they might consider to meet their legal obligations and improve effective fund management of these risks.

This opinion was written in response to the Canada Climate Law Initiative asking Mr. Bauslaugh for his professional assessment of the legal obligations of Canadian pension fiduciaries regarding climate risk.

Two years after investors representing more than $11 trillion in assets called on six of the largest fast-food companies to mitigate climate and water risks in their meat and dairy supply chains, five of those fast food chains (McDonald’s, Yum! Brands, Chipotle, Domino’s and Wendy’s) have either set, or stated they will set, science based emission reduction targets (SBTs). Last year, only McDonald’s had set an SBT, and Yum! Brands had announced its intention to set an SBT. This rapid uptake of ambitious pledges in just one year shows the fast food sector is accelerating action on climate amidst rising pressure from investors. Despite this progress, further progress is needed on analyzing and mitigating water risks and performing climate scenario analyses as recommended by the Task Force on Climate-Related Financial Disclosures (TCFD).

Read this report to see how the six companies have progressed against investors’ requests.

Understanding the potential scale and direction of climate change impacts will improve the quality of estimates for the 2021 NSW Intergenerational Report (IGR) and contribute to prudent and transparent fiscal management.

This paper sets out an approach to assessing physical climate risks for the NSW Intergenerational Report and deploys this approach with respect to four initial areas of physical climate risk:
1. selected costs of natural disasters
2. property and land damage from sea level rise
3. the effects of heatwaves on workplace productivity
4. the effects of climate change on agricultural production.

This is intended to provide an initial analytical framework, evidentiary foundation, and reference case for long-term economic and fiscal risks. This approach provides a foundation that can be extended in the future to cover a broader range of climate risks and deeper analysis of the risks identified in this paper.

This report explores how climate-related risk drivers, including physical risks and transition risks, can arise and affect both banks and the banking system via micro- and macroeconomic transmission channels. According to the report:
– The economic and financial market impacts of climate-related risks can vary according to geography, sector and economic and financial system development.
– Traditional risk categories used by financial institutions and reflected in the Basel Framework (eg credit risk, market risk, liquidity risk, operational risk) can be used to capture climate-related financial risks.
– There is limited research and accompanying data that explore how climate-related risks feed into the traditional risks faced by banks. A better understanding of climate risk drivers and their impact on banks’ exposures across all risk types would be gained from further research by a broader community.

This report provides an overview of conceptual issues related to climate-related financial risk measurement and methodologies, as well as practical implementation by banks and banking supervisors. According to the report:

– Climate-related financial risks entail unique features, which means that sufficiently granular data and forward-looking measurement methodologies are needed to address them.
– To date, measurement of climate related financial risks has centred on mapping near-term transition risk drivers into bank exposures. Credit risk measurement has attracted the most effort, with a lesser focus on other risk categories. Initial scenario analyses and stress tests have in many cases focused on selected portfolios or exposures for transition risks, and selected hazards for physical risks.
– Key areas for further analysis relate to gaps in data and risk classification, as well as methodologies to address uncertainties associated with the nature of climate change and the potentially longer time horizon for risks to manifest.

Computer-based models are valuable tools for investigating scenarios for aligning near-term actions and policies with long-term goals. This
issue brief provides guidance to nonexperts on what to look for in reading and evaluating studies that model climate mitigation