Nature-Related Financial Risks
The Network for Greening the Financial System has released a conceptual framework for assessing nature related financial risks which provides a “starting point for analysis and action”. …
Prudential Transition Plans
Prudential transition plans could offer a technical solution to address some of the challenges of integrating transition risks into the prudential framework, say climate finance experts.
Rising Temperatures, Falling Ratings
Researchers show that climate-induced sovereign downgrades will occur by 2030, and how climate-smart policies could curb the impact on debt-servicing costs.
Crisk: Measuring the Climate Risk Exposure of the Financial System
Economists have developed a market-based measure of the potential effect of transition risk on banks’ capitalisation which can be used to explore ‘severe but plausible’ climate scenarios.
Climate Risk Stress Tests Underestimate Potential Financial Sector Losses
Climate stress tests may significantly underestimate losses and should incorporate “severe but plausible” scenarios such as “green swan” and Minsky-type events, say researchers. …
A Common Path to Improve European Climate Risk Stress Testing and Scenarios Analysis
Survey results show banks are gaining valuable insights from climate risk stress tests, but improvements are needed to effectively manage those risks.
Pension Fund Losses Should Not Deter High Income Countries from Bold Climate Action
Losses caused by stranded assets for lower and middle income groups can be compensated at relatively low cost and are not a credible deterrent to bold climate action, say researchers.
Integrating Nature Into Debt Sustainability Analysis
Multilateral financial organisations would be making a “grave omission” if they fail to include biodiversity-related risks in debt sustainability analyses, according to this report. …
Results of the 2022 Climate Risk Stress Test of the Eurosystem Balance Sheet
The European Central Bank’s 2022 stress test finds that the Eurosystem’s balance sheet is materially exposed to climate risks and that the corporate bond portfolio is the primary source of exposure.
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