Why? It is increasingly seen as necessary for financial institutions to identify their exposure to climate-related liability risks. In most cases these assessments are conducted on a voluntary basis as part of sound market practice; however, regulators and supervisory authorities are introducing requirements to measure, report and manage climate-related risks.
How? To date, progress in this area remains exploratory. Financial institutions have started to develop initial approaches, tools and methodologies to assess their exposure to litigation or legal climate risk. This is predominately based in part on the Recommendations of the Task-force on Climate-related Financial Disclosure.