Despite the Paris agreement last year there is still no agreement on financial disclosure related to climate change risk for governments, industry or financial institutions, according to a new report published today by The Economist Intelligence Unit (EIU) and sponsored by Aviva.
The report, Road to Action: Financial regulation addressing climate change, reviews ten international, EU and UK standard setting and supervisory institutions to consider what role they play, or could play, in supporting climate-related financial risk reporting and standard setting.
Six institutions — (the IMF, the World Bank, the Financial Stability Board, the European Insurance and Occupational Pensions Authority, the Bank of England and the UK Prudential Regulatory Authority)—were found to to have mandates that cover risk and stability - implicitly covering climate change. However three institutions —the International Organisation of Securities Commissions (IOSCO), the International Association of Insurance Supervisors (IAIS) and the Bank for International Settlements (BIS)—were found to be failing on their mandates in terms of setting climate-related risk standards.
The report’s findings indicate that persuading asset owners and asset managers to consider the long-term viability of their portfolios in terms of the financial risks posed by climate change is vital. With consistent disclosure of material risks, both the business and the investor community should be able to make more informed decisions to take steps to reduce their emissions and create greater business resilience.
Renée Friedman, the editor of the report, said: “It should be considered part of the fiduciary responsibility of any institution with a remit to promote financial stability to also address climate-related financial risks”.
“Our research shows that although not currently explicit in many institutions’ mandates, there is definite scope for expansion of these mandates to include climate-change risk because it is considered by many, including the FSB, to be a financial stability risk.”
About the research
The report, sponsored by Aviva, explores the issues relating to climate-related financial disclosure and investigates the mandates of ten different international, EU and UK supervisory and standard-setting institutions in terms of climate-related financial risk reporting.
The findings are based on significant desk research and 22 in-depth interviews with recognised, independent experts from around the world, all of whom are highly familiar with the topics covered and the institutions reviewed.