Featured Product

    FSB Consults on Forward-Looking Climate Metrics for Financial Sector

    October 29, 2020

    FSB's Task Force on Climate-Related Financial Disclosures (TCFD) is seeking views on the decision-useful, forward-looking climate metrics for firms in financial sector, with the consultation ending on January 27, 2021. TCFD also published guidance on integrating climate-related risks into existing risk management processes and guidance on climate-related scenario analysis for non-financial firms. The guidance on scenario analysis is intended to assist non-financial companies interested in using climate-related scenarios as part of their efforts to implement the TCFD recommendations. It is expected to guide companies through the elements, considerations, challenges, limitations, pitfalls, and questions they may face in undertaking climate-related scenario analysis.

    The consultation on forward-looking climate metrics asks questions about the usefulness and challenges of such metrics and what may be necessary to enhance their comparability, transparency, and rigor. Through public consultation, TCFD aims to better understand the evolution of metrics used and disclosed by companies in the four financial groups that were identified in its 2017 supplemental guidance: asset owners, asset managers, banks, and insurance companies. Such metrics may focus on carbon and other emissions or other financially relevant factors. Weighted average carbon intensity and other carbon foot printing metrics provide some visibility into the carbon exposure of certain assets at a fixed point in time. Although still useful for decision-making, past carbon exposures provide little insight into potential future exposure. Financial sector organizations may also use forward-looking metrics to assess climate-related risk and opportunity outside of carbon exposure. Other forward-looking metrics could focus on physical climate-related risk, future valuations of specific assets, and applications of climate within more traditional financial valuation metrics. One example of a forward-looking financial metric is climate Value-at-Risk. TCFD will take consultation responses into consideration to determine whether further financial sector guidance on forward-looking metrics is needed.

    The guidance on integration of risk management and disclosures is aimed at companies that are interested in integrating climate-related risks into their existing risk management processes and disclosing information on their risk management processes in alignment with the TCFD recommendations. The guidance is intended to cover a wide range of companies—from banks and insurance companies to various types of nonfinancial companies, including energy; building and materials; and agriculture, food, and forest products companies. In addition, as with its recommendations in general, TCFD expects this guidance to be useful to companies of all sizes and located in various countries worldwide. The guidance:

    • describes the unique characteristics of climate-related risks that are important to consider when integrating such risks into existing processes.
    • explores the practicalities of integrating climate-related risks into existing risk management processes.
    • describes features of decision-useful risk management disclosures as well as examples of companies’ disclosures.
    • provides, via Appendices, further information on topics covered in the guidance, including transition and physical risk definitions, additional information to support integration, and references.


    Related Links

    Comment Due Date: January 27, 2021

    Keywords: International, Banking, Insurance, Securities, TCFD, Disclosures, Scenario Analysis, Climate Metrics, Climate Change Risk, ESG, FSB

    Featured Experts
    Related Articles

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699