Constructing a feasible approach to estimating climate-related credit risk

By now, including climate change within banks’ risk analysis is acknowledged as an industry need. First, though, banks need to determine exactly what is being calculated, and second, how to integrate the results. Climate change creates risks across multiple dimensions… Climate change will cost businesses, and therefore corporate borrowers, within the real economy, significant amounts […]

US climate bill re-ignites beacon of hope against climate change. Banks need to take notice.

The US recently signed into law, a landmark climate bill that has revived the feasibility of the 2-degree/net zero targets of the Paris 2016 COP. Banks should pay particular heed! Its economic legislation… Officially called the ‘Inflation Reduction Act’, the recent legislation effectively puts the US economy on a determinedly greener path,  aiming at reducing […]

Initiating The Climate Imperative in a time of Chaos

Heat waves in Europe have seen record temperatures and wildfires. Conflict in Ukraine has created huge energy price increases. After a two-year pandemic, lessons can be learned. Weather and climate are not the same… Record hot days are not, in themselves, evidence of climate change. Climate is, by definition, a measure of long-term weather patterns. […]

Banks Need Climate Risk Scenarios to Work through The Uncertainty Of Bonn

The Recent Un Climate Meetings in Bonn did Little To Remove Uncertainty from the Needed Green Transition, but They did Highlight the Need for Banks to Prepare for a Number of Possible Outcomes. Bonn, the bridge between Scotland and Egypt… The June UN Framework Convention on Climate Change (UNFCCC) climate convention in Bonn was both […]

Creating Meaningful Climate Change Scenarios in a Changing World

The Recent Australian Election Highlights the Need for Banks to be Prepared for Transition Volatility, and to Construct Climate Scenarios Accordingly, Or Risk Mispricing Their Loan Book. Climate scenarios differ markedly from traditional banks’ stress testing… Climate scenarios are essential for banks to properly stress test the ‘riskiness’ of their currentbalance sheets, but the creation […]

Finance, agricultural products, and climate change

The global food industry and climate change are highly interconnected. Banks financing agriculture need to understand this relationship and the risks it creates. This paper highlights these two important aspects of modern life, with a focus on sustainability within agricultural products and production. It also delves into externalities of the food industry with regard to […]

Physical and regulatory tipping points are being reached, and banks need to take notice

The 2022 IPCC findings, along with the regulatory policy ideas from the sec, are required reading for banks building their climate risk programs. The IPCC report, released on February 27 was alarming… The long-term aim of the world’s governments, as agreed at the various Conferences of the Parties (COPs), has been to limit global warming […]

Nuances and pitfalls for banks developing climate change scenarios

Risk management groups must interpret a range of scientific taxonomies to navigate the maze of definitions and possibilities is the first step in this mission-critical journey INTRODUCTION Welcome to Emerald Pathways, the second e-book in the GreenPoint Financial series on financing sustainability. The first e-book, Code Red, focused on explaining the higher aims of the […]

System thinking around tipping points is needed for banks’ climate risk strategies

Climate pathways are a mix of adaptation and mitigation. Unexpected physical impacts and positive feedback loops will dictate prioritization of policy rollout. Climate pathways are built on a range of predictive models… Scientists engaged with climate change have been building effective potential climate pathways since the early 1990s. These are collated and curated by the […]

Containing climate change requires financing, innovation, adaptation, and mitigation projects

Banks must understand the differences and intersectionalities between these to interpret and use the market signals that determine the credit risk status of sustainability projects. Meeting climate pathway targets needs Innovation, Adaptation, and Mitigation… Climate change is happening, and its impacts are already being felt, from successively hotter years and decades to once-in-a-century floods becoming […]