Climate change has already altered industries, and banks have not escaped its reach. Banks are finding that climate-related risks, both physical and transitional, are manifesting on their balance sheets. As with any risk, financial institutions that fail to effectively manage climate-change risks are more vulnerable to the rising tide of environmental hazards. What does recent research indicate about banks’ responses to the financial risks (and opportunities for investment) associated with our changing climate?
Banque de France
Central banks, guardians of financial systems, consider multiple factors when determining policy; today, as countries suffer the effects of severe weather, central banks feel impelled to include the risks associated with climate change. Groups such as the Network for Greening the Financial System, which unites central banks to address climate-change financial risks and aids the private sector toward achieving a more sustainable future, allow central banks to pool their resources to combat this threat.