Financial Stability Board Report on Impact of Climate Change on Financial Stability
11/23/2020The Financial Stability Board has published a report on the Implications of Climate Change for Financial Stability. The report breaks climate-related financial stability risks down into three key categories: (i) physical risks (i.e., risks of economic losses caused by natural catastrophes); (ii) transition risks (i.e., risks arising from the process of adjusting to a low carbon economy); and (iii) liability risks (i.e., risks arising from parties being held liable for losses caused by environmental damage).
It also discusses actions that financial institutions and authorities may take, or be taking, to mitigate these risks, including heightened due diligence, engagement with investees and clients, tracking financial firms' exposures to climate risk and integrating climate considerations into investment decisions and governance strategies. The FSB intends to carry out further assessments on the availability of data through which climate-related risks could be monitored, which it intends to complete by October 2021.
View the FSB's report.
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