Banking risk management on the African frontline of climate change
There is much discussion about the physical impacts of climate change on Africa, but the central banks of this continent are well aware of, and are preparing regulations to deal with increased credit and liquidity risks created by the physical and transitional elements of global warming. Banks in the region need to pay close attention. […]
The ECB has led the way in climate guidance; now, banks need to follow it
In 2020, the European Central Bank (ECB) released its guidance for inclusion of climate change in risk management frameworks. The 2022 survey conducted by the Central Bank shone a light on where the industry is in its journey and how much further it has to go. The ECB issued guidance on how financial institutions should […]
The US government is picking up pace on climate change, and banks’ risk departments should follow suit
Banks struggling to create economic scenarios to replicate climate pathways ought to review the recent Whitehouse whitepaper on how they are incorporating climate change into their own budget forecasting. This may prove invaluable for evaluating their own potential climate-related credit costs and avoid future liquidity issues. The US government has been more active in the […]
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 […]
Banks that build carbon pricing into their risk planning will have an advantage as climate finance matures
Carbon pricing schemes are core weapons in the fight against climate change, and their impact will have significant consequences for banks’ balance sheets The year 2021 was officially the 5th warmest year on record and adds to the tally that see the last seven years as the seven warmest since the industrial revolution. 2021’s temperature […]
