Climate models have a major blind spot: they can’t see extreme weather-related risks. This is a big problem for financial institutions, since these kinds of threats — also known as acute physical risks — could hammer their investments and sap their capital. But despite their shortcomings, financial supervisors are already using these flawed models to […]
Alex
US Inflation Reduction Act Unlocks Climate Opportunities
A brighter climate future is here. On August 16, US President Joe Biden signed the Inflation Reduction Act, which includes USD$369bn in climate change and clean energy investments. That’s the most the US government has ever spent to address global warming. Expert analysis shows the legislation should cut US emissions by around 40% by 2030, relative to […]
Weekly round-up: August 8-12
Weekly round-up: August 8-12 1) GFANZ publishes guide on portfolio alignment metrics The world’s largest climate finance initiative wants to improve how financial institutions track the alignment of their portfolios with net-zero goals. On Tuesday, the Glasgow Financial Alliance for Net Zero (GFANZ) proposed new and enhanced guidance on developing and using portfolio alignment metrics (PAMs). These metrics […]
Climate Trends: Manifest Climate Data Reveals Gaps in Companies’ Emissions Disclosures
Companies are under growing pressure from investors, customers, and regulators to disclose their greenhouse gas (GHG) emissions. This data is essential for understanding just how much each business contributes to climate change and for establishing credible emissions-reduction targets, a key part of any organization’s broader climate plan. It also allows companies to benchmark their progress […]
GFANZ Wants to Whip Portfolio Alignment Metrics into Shape
Our climate future is unknown territory. Still, financial institutions want to plot a course to its coolest fringes. Hence the buzz over portfolio alignment metrics (PAMs) — the measurement systems firms can use to understand what investment, lending, and underwriting activities support a 1.5°C warming pathway. Banks, asset managers, asset owners, and insurers want PAMs […]
Weekly round-up: August 1-5
The top five climate risk stories this week 1)Worst-case climate scenarios “dangerously underexplored” Extreme climate change outcomes are “under-studied and poorly understood,” a group of scientists have warned. In a paper published Monday, they argue that a “Climate Endgame” research agenda is needed to explore the worst-case outcomes of catastrophic global warming. These include famine and undernutrition, […]
Climate risk regulation rundown: July 2022
What happened in climate-related financial regulation last month, and what’s coming up The Financial Stability Oversight Council (FSOC), the US’ top financial regulatory body, received an update on its member agencies’ efforts to combat climate-related risks at a meeting on July 28. The FSOC published a factsheet following the meeting outlining the “considerable progress” made advancing the panel’s recommendations on […]
Weekly round-up: July 25-29
The top five climate risk stories this week 1) Banks falling short of Paris climate goals Banks have to speed up their decarbonization efforts if they are to align with climate pathways set out by the 2015 Paris Agreement, an analysis conducted by two investor groups shows. The Institutional Investors Group on Climate Change (IIGCC) […]
Yes, the FSOC *is* a tool to address climate change
The regulatory body has an explicit duty to respond to emerging threats to the stability of the US financial system. Climate change is one such threat. US financial regulators have been playing catch up on climate risk for much of President Biden’s time in the White House. By some measures, they have made good progress since […]
What OSFI’s Draft Climate Risk Guideline Means for Canadian Financial Institutions
On May 26, Canada’s federal financial regulator released a draft guideline that outlines how nationally regulated financial firms should both manage and disclose their climate risks. As part of the draft guideline, the Office of the Superintendent of Financial Institutions (OSFI) lays out six climate governance and risk management principles, as well as six climate-related […]