Featured Product

    Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks

    September 14, 2023

    At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain. One such initiative is the recent Bank for International Settlements (BIS) TechSprint, which calls for technology solutions to address data-related gaps in sustainable finance. While the Network for Greening the Financial System (NGFS) also recently published beta version of the conceptual framework for nature-related risks to guide policy actions, addressing climate-related litigation risk looks to emerge as a new focus area at the supervisory level.

    Below are the key highlights of the latest developments in these areas of climate-related financial risks:

    • Climate-related litigation risk. NGFS recently published two reports, one of which outlines trends in climate litigation risks while the other report brings in focus the micro-prudential supervision of risks associated with the increase in climate-related litigations. The micro-prudential supervision report sets out potential supervisory options and suggests that supervisors adopt a risk-based approach. Prudential regulators may consider how to assess climate-related litigation risk through exposure analysis at a jurisdictional and entity level. Supervisory options explored include awareness building exercises, risk mitigation and transfer considerations, establishment of governance and risk management expectations to be assessed in prudential reviews, climate-related litigation disclosures, testing of resilience through scenario analysis, and regulatory capital considerations.
    • Framework for nature-related risks. This NGFS publication aims to define nature-related financial risks and related concepts that are needed for a high-level understanding of these risks. It also offers a framework to help central banks and supervisors identify and assess nature-related financial risks. The principle-based risk assessment framework consists of three phases: identify sources of physical and transition risks; assess economic risks; assess risk to, from and within the financial system. Finally, it outlines the next steps to be taken by the NGFS Taskforce, including bridging the modeling and data gaps (notably on the development of nature-related scenarios), and using emerging datasets to support the alignment of policies on environmental sustainability and inform the assessment of nature-related financial risks.
    • TechSprint on Climate Risk Solutions. BIS, COP28 Presidency, and the Central Bank of the United Arab Emirates (CBUAE) launched a TechSprint to drive progress in climate action. The Sprint calls for the development of technological solutions for sustainable finance and to combat climate change. The Sprint has three problem statements: The first statement is focused on AI, including gen AI, solutions for sustainable finance reporting, verification, and disclosure in the financial services industry. The second calls for blockchain solutions for auditing and enhancing transparency, traceability, and accountability in sustainable finance. The third problem statement is focused on the internet-of-Things and sensor technology solutions for sustainable finance to ensure informed assessments of impact, risk, or compliance. The TechSprint is open to technology developers and innovators from around the world. Potential participants must submit a technology proposal to one or more problem statements by October 06, 2023.


    Visit Moody's Analytics Climate and ESG Risk Microsite to learn how you can proactively incorporate climate and ESG insights into your risk assessment process.

    Related Links


    Keywords: International, Banking, ESG, Regtech, Nature-Related Risks, Conceptual Framework, Climate Change Risk, Climate Litigation Risk, TechSprint, NGFS, BIS

    Featured Experts
    Related Articles

    US Regulators Release Stress Test Scenarios for Banks

    The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).

    February 28, 2024 WebPage Regulatory News

    Asian Governments Aim for Interoperability in AI Governance Frameworks

    The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.

    February 28, 2024 WebPage Regulatory News

    EBA Proposes Operational Risk Standards Under Final Basel III Package

    The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.

    February 26, 2024 WebPage Regulatory News

    EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS

    The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.

    February 23, 2024 WebPage Regulatory News

    ECB to Expand Climate Change Work in 2024-2025

    Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.

    February 23, 2024 WebPage Regulatory News

    BIS Bulletin Examines Cognitive Limits of Large Language Models

    The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.

    January 25, 2024 WebPage Regulatory News

    ECB is Conducting First Cyber Risk Stress Test for Banks

    As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.

    January 24, 2024 WebPage Regulatory News

    EBA Continues Momentum Toward Strengthening Prudential Rules for Banks

    A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.

    January 24, 2024 WebPage Regulatory News

    EU and UK Agencies Issue Updates on Final Basel III Rules

    The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards

    December 19, 2023 WebPage Regulatory News

    Industry Agency Expects Considerable Uptake for Swiss Climate Scores

    The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.

    December 18, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8952