Climate Risks: Approaches, Tools and Methodologies

2017 - 2018 Work Streams WS1- Climate Risks : Approaches, tools and methodologies

It is increasingly recognized that climate change will have far-reaching implications for how financial institutions identify, assess and manage a range of both risks and opportunities. Whether in the form of the implications of the physical impacts of climate change – or the policies and market shifts expected to be necessary to stabilize and reduce greenhouse gas emissions – financial institutions will need to recognize the importance of understanding and addressing climate change risks to their existing portfolio and operations, as well as to pipeline and future investments.

Context and existing work

The issue of climate related risks and opportunities has been identified by financial institutions over the last 10 years. Whether focusing on physical-related risks or more recently beginning to take into consideration transition related risks, this is beginning to be given serious consideration following reports by the Carbon Tracker Initiative, Cambridge Institute for Sustainability Leadership and the European Systemic Risk Board. Legislation in 2015 in France has required reporting of extra-financial information related to these risks.

In April 2015 the G20 Finance Ministers and Central Bank Governors requested the Financial Stability Board “to review how the financial sector can take into account of climate-related issues.” Consequently, the FSB launched in January 2016 the Task Force on Climate-related Financial Disclosures (TCFD) with the mission to provide recommendations for companies to improve their disclosures on financial impacts of climate issues in a way that will help financial actors to understand the climate-related risks of their portfolios. On December 2016, the draft conclusions of the TCFD were published and the consultation on these recommendations closed on February 12.

Objective 

The objective of this work stream is to facilitate knowledge sharing between Supporting Institutions on climate-related risk management. This workstream will look at three key areas of questions to develop common understanding of climate risk-related issues; shared definitions; and experience on developing metrics to assess this issue quantitatively and qualitatively.

Useful Resources

Relevant Publications

Relevant Cases Studies

Discover the 3 other Work Streams

 
Mapping reporting initiatives and understanding implementation challenges
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City-level climate
smart approaches
and
financial
instruments
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Spreading
a climate strategy
into
a whole
organisation
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