Greening Finance

By Stacy Swann The Biden administration is reportedly preparing an executive order that will require federal agencies to measure, manage, and disclose climate risks — and which, by extension, likely signals new rules for financial institutions and for companies working in sectors from energy to agriculture. Meanwhile, the Federal Reserve is setting up committees to look at climate risks to banks and the broader financial system, and the Securities and Exchange Commission is considering climate disclosure requirements for public companies. At the state level, the New York Department of Financial Services has put the nation’s first-ever regulatory framework for climate [...]

As the toll of climate risk events climbs, the finance sector is at a crossroads of conventional wisdom and best practices. This year, in the weeks following devastating Australian fires and unprecedented flooding in Indonesia, climate-related risks dominate the World Economic Forum’s Global Risks Report 2020 top five long-term risks. The experts who inform the annual WEF survey likewise highlight climate-related risks are among the most important short-term risks. In short, climate risks are here now. And they are gravely serious for the economy as well as the planet: A new paper from the Bank for International Settlements, the central [...]

To say that climate change has the potential to threaten financial stability is not news. 2020 will mark five years since Mark Carney’s famous speech about the Tragedy of the Horizons, which highlighted the short-termism inherent in most financial decision making – both by investors and policymakers – as perhaps the single biggest barrier preventing the full integration of climate considerations into the financial system, and thus an often overlooked potential risk. Much “issue spotting” on the topic of the financial risks from a warming planet has been done since then, including the groundbreaking work of the Task Force on [...]

At the beginning of April, Chair of the International Accounting Standards Board (IASB) Hans Hoogervorst gave a speech expressing his views that sustainability reporting is insufficient to incite change, and that more concrete steps need to be taken to address climate change. The IASB is the premier private-sector entity establishing and governing the widely-recognized International Financial Reporting Standards (IFRS). When the IASB speaks, accountants, sustainability professionals, and ESG-attuned investors across the private sector listen – and the IASB is one of the foremost global authorities on accounting standards, which are directly upstream of corporate disclosure, lending weight to its leadership’s [...]