UNEP FI Maps Status of Climate Risk Analysis

The UN Environment Programme Finance Initiative (UNEP FI) has published the ‘Climate Risk Landscape’ report to help financial institutions accurately interpret the outcomes of climate risk analysis. The body developed a ‘dummy’ portfolio, which was constructed to “harmonise input factors and ensure a multi-asset analysis”, with UNEP FI then outlining its findings following climate risk assessment outcomes from multiple vendors. Ensuring the long-term resilience of investors’ portfolios and considering both transition and physical risks is vital, the report said, further noting that data availability continues to be a “significant challenge” for vendors attempting to deliver more precise analytics. The report also highlighted the challenges of comparing results obtained from different climate tools, even when they are assessing the same metric. This “emphasises the importance of comprehending the assumptions of each tool”, UNEP FI said, which is “vital for accurate interpretation of the outcomes”. Also this month, UNEP FI’s Climate Risk and Taskforce on Climate-related Financial Disclosures (TCFD) Programme published the Climate Risk Tool Dashboard to support financial institutions as they navigate “the ever-evolving climate risk tool universe”, featuring overviews of more than 40 tools’ features, methodologies, metrics, assumptions, and common use cases.

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