Climate change poses risks to the stability of the financial system. Economic losses from extreme weather are increasing each year, leading to increased liabilities for insurers. Rapid changes to how we power our homes and transport promise to leave investors with ‘stranded’ assets. As scientists continue to highlight the severity of the climate emergency, governments and central banks are looking to financial services to lead the response.
Financial firms must prepare for the new climate of scrutiny
Financial markets have long assumed that the policy response to climate change will be limited. This is a dangerous assumption. 2019 saw the first major climate-related bankruptcy - Californian utility firm PG&E – and in the UK the Bank of England committed to ‘stress testing’ lenders and insurers against the worst impacts of climate change by 2021. At Avieco we expect UK listed companies and asset managers to face mandatory reporting of climate risks by 2022.
As a financial services firm, you can prepare for increased scrutiny by ensuring your own balance sheet is climate-resilient, quantifying the climate risks and opportunities you face, and supporting industry collaboration to develop sustainable financial products.
Climate action begins at home
You should also consider the direct impacts of your business on the environment, by assessing and reducing the harmful consequences of your organisation’s operations and supply chain. Companies can establish policies to work only with organisations that meet certain environmental standards, and can get ahead of legislation by voluntarily disclosing its environmental impacts.
Manage your risk with Avieco
At Avieco we use our extensive experience of working with the financial sector to help firms understand both their impacts on the environment and the impact of the environment on the macroeconomy and their investments.
We take firms on a journey from basic compliance through the industry leadership.
Start your journey to climate-resilience today
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