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    Denis Beau of BDF on Supervisory Priorities for Climate-Change Risks

    May 21, 2019

    Denis Beau, the First Deputy Governor of BDF, delivered opening remarks at the BCBS-BSCEE-FSI High-level Meeting for Europe on banking supervision. He talked about the emerging supervisory priorities for risks related to climate change.

    Mr. Beau noted that along with some other national central banks, BDF and ACPR started to work on sustainability risks since 2015, particularly on financial risks arising from climate change. In 2018, ACPR surveyed both main French banking and insurance companies to take stock of progress they have achieved in dealing with climate change-related financial risks. At the end, the release of these surveys and their follow-up signal the willingness of the ACPR/BDF to gradually “mainstream” climate change-related risks. These assessments confirm the relevance to pursue the ACPR’s analytical and supervisory work so that the financial sector further takes into account these risks. The next steps are to organize working groups with banks to:

    • Specify together the best practices of the sector in terms of governance
    • Reflect on scenarios and metrics to best assess the vulnerability of banks, liaising with the work carried out with the "Network for Greening the Financial System" (NGFS)

    Mr. Beau highlighted that at a moment where networks or work streams are growing rapidly, especially within European institutions, it is required to be very careful about the good coordination of different initiatives to avoid redundancy and duplication. He also welcomed the following six recommendations, which were issued in April and are directed at supervisors, central banks, and the financial sector:

    • Integrating climate-related risks into financial stability monitoring and supervision
    • Integrating sustainability factors into own-portfolio management
    • Bridging the data gaps
    • Building awareness and intellectual capacity and encouraging technical assistance and knowledge-sharing
    • Achieving robust and intentionally consistent climate and environment related disclosure
    • Supporting the development of a taxonomy of economic activities

    He concluded that, in the longer-run, when there will be a global convergence about the necessity to issue global standards and regulatory requirements, global standard-setters such as BCBS and FSB, would need to take the lead on addressing climate change-related risks.

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    Keywords: Europe, France, Banking, Insurance, Governance, Operational Risk, Climate Change Risk, ACPR, BDF, BIS

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