Climate risk: no place to hide
It’s probably just a matter of time before the SA Reserve Bank makes the disclosure of financial firms’ exposure to climate risk mandatory and introduces climate-related stress tests
The International Monetary Fund (IMF) considers climate change a systemic risk to the global economy, and is stepping up its efforts to deal with climate risk. So, too, are many central banks and other regulators, which are seeking to raise climate risk disclosure standards.The immediate aim is to help financial institutions and investors better assess their climate-related exposure, and help regulators better gauge system-wide risks. The broader goal is to help ensure that more money flows into low-carbon, climate-resilient investments.The rapid increase of green bonds (for which 95% of the proceeds go to environmental uses) is a positive trend — new green bond issues topped $100bn globally in the first half of 2019 — but much more is required.Bank of England (BOE) governor Mark Carney estimates that the world has just two business cycles, or 12 years, in which to stop runaway climate change.Limiting global warming to 1.5°C will require a 45% decrease in emissions by 2030 and net...
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