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Global Financial Giants Collaboration to Promote Climate Transparency


Eleven of the world’s leading banks in partnership with the UN Environment Finance Initiative (UNEP FI) announced in July 2017 about their commitment to developing analytical tools and indicators to boost their assessment and disclosure of climate-related risks and opportunities.
 
In line with the last month publication of the final recommendations by the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD), the banks go beyond accepting the recommendations but are the pioneers from their industry to make efforts to adopt major elements of the new framework.
 
According to Erik Solheim, Head of UN Environment, the financial giant passed a clear message – our economy is seriously threatened by climate change. However, a lot of opportunities abound if the right climate action is taken. Transparency about the manner in which financial institutions reduce the risk and take advantage of these ways is essential to move international markets towards active participation in backing a climate-resilient and low-carbon future.
 
The Financial Stability Board, headed by Mark Carney, Bank of England Governor, compelled the Task Force to develop voluntary, steady climate-linked financial disclosures that will serve insurers, lenders, investors, and companies. There will be an increase in financial system’s stability and investments that are climate friendly will increase if the number of reliable information concerning the exposure of financial organizations to opportunities and risks that are climate-related. Headed by Michael Bloomberg, the former Mayor of New York, the final recommendations of the Task Force’s was published towards the end of June and presented to the G20 in July 2017.
 
Both civil groups and financial organizations agree with the recommendations as the importance of the finance sector in achieving the goals of the Paris Climate Agreement becomes clearer. The outcome of the pioneer project to implement the recommendations will be publicized to encourage banks globally to adopt the approaches, models, and scenarios developed.
 
According to Group Head of Strategy, Sustainability and Public Affairs at the AXA Group, Co-Chair of UNEP FI and TCFD Vice-Chair, Christian Thimann, sustainable finance centers on two essentials: enhancing finance contribution to sustainable, low-carbon and inclusive growth as well as maintaining financial stability to mitigate environmental risks like climate change. The TCFD system buttresses how the achievement of these two goals by both non-financial and financial institutions demands the provision of more transparency on how they intend tackling the opportunities and risks pertaining to climate change.
 
Following the G20 Implementation is now the issue:  in what way can the finance industry implement the framework and deliver meaningful disclosure? The UNEP through this and other industry-controlled working groups is assisting the finance sector in doing exactly that, a stage where they grow from awareness to action.