Banks around the world are slowly beginning to realise the financial risks associated with climate change and sustainable lending, according to Paul Fisher, a former senior executive at the Bank of England who had direct involvement in the Financial Stability Board’s Taskforce on Climate-related Finance Disclosures (TCFD).
Speaking to bluenotes on video and podcast, Dr Fisher – Senior Associate of the Cambridge Institute of Sustainability Leadership and representative at the European Commission’s High-level Experts Group on Sustainable Finance – said the next step for banks was determining the extent of their own risk.
"[Banks] are slowly moving and realising actually, this is a mainstream financial issue.” – Paul Fisher
“It’s clear to me most of the banks up until now have seen climate change as a social, ethical or moral issue if you like, rather than a financial issue,” he said. “They’re just slowly moving and realising actually, this is a mainstream financial issue. And that requires quite a lot of detailed work.”
Dr Fisher said banks would have to go through their assets in a detailed manner to determine and then report on the environmental impact.
“That work hasn’t really been done yet,” he said.
The TCFD released its final recommendations report in June, setting out guidelines around company reporting on climate-related risks and opportunities. The report was aimed at providing assurance to investors, banks and insurers around minimising climate-related risk.
“The nature of the taskforce recommendations are that [companies] should report what they are doing, rather than ‘here’s a list of things that you must do,” Dr Fisher said.
Dr Fisher encouraged companies to work together on reporting climate risk across their sectors, noting it was “almost impossible to do this purely on your own.”
He also said banks are generally behind insurers and asset managers when it came to fully grasping climate-related risk. Watch the video and listen to the podcast above to find out more.
Paul Orton is Head - Project & Export Finance, Institutional Banking at ANZ
Dr Fisher was on a speaking tour of Australia as a guest of Climate Alliance
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.