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Big banks gear up to navigate low-carbon ‘transition risks’

ImpactAlpha, April 30 – Big banks took another step toward full carbon accounting, backing new guidance to assess their ‘transition risks’ as the world moves to a low-carbon economy. Assessing risks posed by climate warming scenarios is a key recommendation of the Task Force on Climate-Related Financial Disclosures, the industry group chaired by former New York mayor Michael Bloomberg.

  • Adaptable… The new methodology allows banks to apply state-of-the-art climate scenarios across multiple risk factors and timeframes.
  • Global banks… The 16 banks that collaborated to develop the methodology and will help pilot-test it include ANZ, Barclays, BBVA, BNP Paribas, Bradesco, Citi, DNB, Itaú Unibanco, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, TD Bank Group and UBS.

Climate accounting is destiny, Bank of England Governor Mark Carney suggested in a 2015 speech to insurers. “We can build that virtuous circle, of better understanding of tomorrow’s risks, better pricing for investors, better decision making by policy makers and a smoother transition to a low-carbon economy.”

–Elena K. Johansson

Due to an editing error, an earlier version of this article incorrectly stated one of Mark Carney’s professional positions. Carney is the governor of the Bank of England and the chairman of the Financial Stability Board. The article has been corrected.

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