September 10, 2020 – There is a growing consensus among members of the Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) that climate-related and environmental risks could result in significant risks for financial institutions, and will have serious implications for financial stability. In order to effectively address climate-related and environmental risks, greater collective efforts are urgently needed from regulators, financial institutions, international organizations, third-party vendors, and academic institutions to promote the wider adoption of Environmental Risks Analysis (ERA) in the financial industry. This is the overarching conclusion of the two NGFS publications released today:
The Overview of Environmental Risk Analysis by Financial Institutions (PDF)provides wide-ranging examples of how environmental risks translate into financial risks, and an in-depth review of the tools and methodologies for ERA used by financial institutions including banks, asset managers and insurance companies.
The Overview is a non-technical review of ERA tools and methodologies based on the NGFS Occasional Paper “Case Studies of Environmental Risk Analysis Methodologies”. (PDF)