The Asia Investor Group on Climate Change (AIGCC) and think-tank China Water Risk (CWR) have sent an open letter to the Asian banking sector warning that their stress tests need to reflect latest science on the region’s risk from sea level rise. AIGCC, which represents investors with US$32 trillion under management, and CWR have recommended improvement to stress tests, including use of appropriate time horizons to ensure that risks are adequately captured, and the integration of plans that governments are or are not taking. Eric Nietsch, Head of Sustainable Investing – Asia, Manulife Investment Management and Chair of AIGCC’s Physical Climate Risks and Resilience Working Group, said: “Current stress testing approaches often underestimate sea level rise risks because of a time frame that is too short, and the level of sea level rise used Is too low. We hope that enhancing these assessments will lead to improved planning and greater resilience. We are encouraging banks to review their exposures, particularly in sectors like trade, manufacturing and real estate that are so vulnerable to sea level rise.” The letter draws on from CWR’s report ‘Futureproofing APAC Banks & Savings: Stress test right today, avoid hard landing from rising seas‘.
