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Canada insurance faces growing climate change risk, while the Bank of England was urged to address nature-related financial risks, and a US regulator ended its climate risk guidance for large banks. All this and more in this week’s roundup.
Canadian insurance association warns of growing climate change risk
Severe weather in Canada caused over CA$1.7bn in insured losses in 2024, the second-highest losses to commercial properties in Canadian history, the Insurance Bureau of Canada (IBC) reported.
The majority of losses were in the summer due to wildfires, floods and hailstorms and Jasper in Alberta was hardest hit, accounting for nearly 40% of weather losses. The association of insurers said the financial toll highlights the scale of extreme weather events facing the industry.
The events caused not only physical damage, but also disrupted business operations, supply chains and the flow of goods and services. The cost of insured losses for damages to homes, business and vehicles has doubled in the last five years, which the IBC said is a “clear reminder of the need to improve Canada’s resilience to the risks our communities face from severe weather”.
Liam McGuinty, vice president of strategy at IBC, said Canada needs “to get serious about public policy solutions that make Canada more resilient”.
“Canadian governments must move swiftly to make targeted investments in infrastructure that defends against floods, improve land-use planning rules that ensure homes and businesses are not built on flood plains, and that [national wildfire] best practices are followed in communities in high-risk wildfire zones”.
Three Danish funds fail to meet EU regulatory requirements, regulator finds
Three Danish asset managers have “significant deficiencies” in their ESG funds and have failed to meet EU regulatory requirements for sustainable investments, Danish regulator Finanstilsynet (FSA) has said.
The funds were assessed against the EU’s sustainable finance disclosure regulation, which requires ESG funds to contribute to environmental and social goals, measure impacts, follow “do no significant harm’ principles and follow good management practices.
One fund was found to invest in companies still undergoing a transition and did not account for indicators needed to measure the “do no significant harm” rule. Another fund did not properly monitor and report environmental and social contributions, while a third fund failed to reduce its emissions in line with a climate benchmark as it claimed to have done in fund documents.
The FSA has become very strict in its ESG naming rules and has even been accused of being stricter than the European Securities and Markets Authority. Despite questions about potential changes to the sustainable finance disclosure regulation (SFDR) due to the EU’s omnibus proposal, the FSA has said it would continue to enforce sustainable finance regulations. Financial institutions in the EU have had to report under SFDR since 2023.
A third of European ESG funds hold stakes in fossil fuel projects
Nearly 5,000 funds marketed as ESG hold stakes in fossil fuel companies, a study from a group of nonprofits found.
The study looked at more than 14,000 European funds claiming to target ESG goals, and found a third had invested more than €123bn in companies that have projects in expanding the production of oil, gas and coal.
The most frequent companies found in ESG funds were TotalEnergie, Shell, Exxon Mobil, Chevron, Eni SPA and BP.
The report is the latest study that raises questions about ESG marketing and the potential for greenwashing. The European Securities and Markets Authority is working to streamline the definition of ESG and has issued guidelines for using ESG and sustainability terms in fund names.
US regulator ends bank climate risk guidance
The US Office of the Comptroller of Currency (OCC) withdrew its guidance to help large banks manage climate-related financial risks in the latest backtracking from the US government on climate change issues.
Acting comptroller of the currency Rodney Hood said the extra guidance was “overly burdensome and duplicative” and was already covered by existing guidance in its sound risk management framework.
The guidance was established in 2023 in collaboration with the Federal Reserve and Federal Deposit Insurance Corporation (FDIC). The news comes just months after the OCC, Fed and FDIC all withdrew from the Network for Greening the Financial System, an alliance of central banks dedicated to addressing climate change risks.
Bank of England urged to step up its coverage of nature
The Bank of England (BoE) needs to step up its coverage of nature-related risks, a report noted, arguing that it is not using the tools it has to protect or mitigate such risk.
The report from thinktank Green Alliance urged the BoE to set out guidance for banks and insurers on climate and nature risks by the end of the year and called on the central bank to consult on nature and climate capital adequacy requirements in order to ensure that policies are in place before the next stress test in 2027.
The BoE highlighted nature as a financial risk in 2022, and the bank’s remit was updated last year by UK chancellor Rachel Reeves to look at both climate and nature-related financial risk.
Research notes
Some recent research on climate and the economy worth reading:
Climate-aware Investing
In this paper from Anandakumar Jegarasasingam, the author looks at investment strategies focused on climate risks and explores the key concepts and strategies behind lowering emissions generated from investments, as well as potential limitations from central banks investing in climate-aware investments.
Climate Minsky Moments and Endogenous Financial Crises
Authors Mattias Kaldorf and Matthias Rottner examine if the transition to net zero decreases financial stability. While it finds that a climate policy in line with the Paris Agreement does increase financial fragility, carbon taxes can enhance stability in the long-term, challenging the notice that financial stability justifies delaying the transition to a green economy.
Green Securitisation: A Lever for Financing the Transition
In this post from the Banque de France, the authors look at green securitisation as a means of unlocking funding for the transition. They argue that a European securitisation platform could help this goal and that it is a nascent market segment.
This page was last updated April 7, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
