Financial exposure: climate data deficit

Climate change is now recognised as a key driver of risk and opportunity within the global economy. Over the past two years, we have seen a critical paradigm shift in the way the financial sector considers and responds to climate risks. These considerations extend beyond ideology or environmental concerns, as economic and financially sound decision-making requires firms to respond to the risks posed by climate change. The transition to a low-carbon economy is already underway. The world’s leading supervisory authorities and central banks are encouraging this smooth transition, and working to close the climate data deficit around the likely impact of the physical, transition and liability risks of climate change. There is a role for regulators, supervisors and central banks globally to ensure that the entities they regulate identify, assess, manage and publicly disclose their climate risks. However, a multi-stakeholder approach, involving industry, academia, think tanks and policymakers will be required for a smooth transition to a low-carbon economy.