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

    APRA Publishes Results of Climate Risk Self-Assessment Survey

    The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.

    August 04, 2022 WebPage Regulatory News

    ACPR Publishes Updates Related to CRD IV and Covered Bonds

    The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).

    August 03, 2022 WebPage Regulatory News

    EIOPA Publishes Guidance on Climate Change Scenarios in ORSA

    The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).

    August 02, 2022 WebPage Regulatory News

    EBA and ECB Respond to Proposals on Sustainability Disclosures

    The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.

    August 01, 2022 WebPage Regulatory News

    BIS Report Notes Existing Gaps in Climate Risk Data at Central Banks

    A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.

    July 29, 2022 WebPage Regulatory News

    EBA Publishes Multiple Regulatory Updates for Regulated Entities

    The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.

    July 29, 2022 WebPage Regulatory News

    EIOPA Issues SII Taxonomy and Guide on Sustainability Preferences

    The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.

    July 29, 2022 WebPage Regulatory News

    EESC Opines on Proposals on CRR and European Single Access Point

    The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).

    July 29, 2022 WebPage Regulatory News

    HM Treasury Publishes Multiple Regulatory Updates in July 2022

    HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.

    July 29, 2022 WebPage Regulatory News

    APRA Consults on Prudential Standard for Operational Risk

    The Australian Prudential Regulation Authority (APRA) is seeking comments, until October 21, 2022, on the introduction of CPS 230, which is the new cross-industry prudential standard on operational risk management.

    July 28, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8422