Banking’s approach to climate change, from the philosophical design of stress tests, through inclusion in risk management frameworks, to stakeholder reporting, is firming up against a backdrop of a truly international conversation about the industry’s role in the fight against this existential crisis.
INTRODUCTION
Welcome to the third e-book, Jaded Horizon, a collection of the last series of articles, aimed at providing context and direction for banks looking at how to manage the financial risks posed by climate change.
2022 was a difficult year for those hoping to see firm action on the climate crisis, particularly after a promising COP in Glasgow in 2021. That said, there was significant movement in terms of exactly how banks should aim to measure and report potential impacts. From a certain perspective, the increasing focus on sustainability that had developed had outpaced the financial industry’s efforts to create meaningful ways to include the emergent risks within existing frameworks. As policymakers around the world dealt with the immediate needs of rebuilding COVID-ravaged economies, a European ground war, and surging inflation, central banks and regulators carried on their work in the area and made up much of that ground. This e-book tracks this progress and puts these efforts into a meaningful context for risk managers working in the financial sector.
Scenario-based analysis and climate stress testing are discussed, along with the shifting parameters that become unavoidable in an area where deep interconnectedness and ‘systems thinking’ design is the norm. We explore the dynamics of tipping points and their impact on financial priorities, between adaptation and mitigation, as well as the way the early Basel Committee on Banking Supervision (BCBS) and European Central Bank (ECB) guidelines are gaining international acceptance.
Above all, the pieces inside this e-book are designed to spark conversation and meaningfully contribute to one of the most important developments in risk management the industry has ever considered. All original pieces are available, along with the first two series – ‘Code Red’ and ‘Emerald Pathways’, at greencap.live.
We hope you find the articles as useful as we did when researching and writing them.
