Financial Services Firms Inconsistently Accounting for Climate Risk

Thirty-five percent of assessed senior executives from financial services firms and corporations around the world are only in the early stages of planning how to incorporate climate risk into their business models and governance. The survey of 100 senior executives by Bloomberg further noted that 43% said they are in the “mid-stage” of incorporating climate into their risk management and governance analysis, while just 5% are in the advanced stages of utilising comprehensive data and multi-scenario analysis across carbon emissions, geolocation data and extreme weather events. In total, 85% of respondents said they have at least started assessing climate risk. Twenty-five percent of respondents noted that regulation and disclosure requirements are driving their commitment to incorporating climate risk considerations into their investment process, following by 14% citing reputation-related risk and 9% pressure from clients. Zane Van Dusen, Head of Risk and Investment Analytics Products at Bloomberg, said: “Most firms are at the early stages of implementing their climate risk frameworks, and even those who say they have a robust model will be making significant changes over the next few years as our understanding and consensus around climate risk grows. More and better data will go a long way toward improving firms’ ability to manage climate risk.” 

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