Climate-related financial risk regulations are firming up all around the world

The world’s central banks and regulators are watching governments create policies and promises that will cause short-term economic pain, in the name of long-term sustainability. the liquidity implications are becoming obvious, and bank reporting rules are changing. banks should follow these changes carefully to avoid being left flat-footed in the global race to net zero.


Welcome to Green Lights, the fourth e-book in our green finance series. This collects articles 31 to 35, and covers the regulatory advances in the area of climate-related financial risks around the world.

From guidance from the Basel Committee on Banking Supervision (BCBS) (which has been significantly enhanced in the climate change area), to specific advances from the Federal Reserve System (Fed), European Central Bank (ECB), and multiple African central banks, the need to report potential credit and liquidity impacts is growing.

The UK was a frontrunner in terms of green policy, but the possible effects on the climate-based economic scenarios of missing its early targets are explored in the ‘Mission Zero’ piece. Africa and the EU are leading the way in adopting BCBS’ best practices, and the US is catching up fast. All are covered in specific papers, as well as a review of the BCBS guidance itself.

Understanding the state, directionality and speed of change of these regulations is vital to prudent risk management and preparedness for regulatory compliance. We hope that you find this e-book informative and useful while preparing to include climate-related risks into your risk management frameworks.