As part of a project exploring climate-related risks and opportunities for financial institutions, the United Nations Environment Programme – Finance Initiative (UNEP FI) has released a new methodology that will help banks improve the ways in which they manage the risk of transitioning into a low-carbon economy.
The methodology was developed with the support of Oliver Wyman and Mercer in close collaboration with a working group of sixteen leading banks. The group, which includes ANZ, BBVA, BNP Paribas, Barclays, Bradesco, Citi, DNB, Itaú Unibanco, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Standard Chartered, Société Générale, TD Bank Group, and UBS, is also piloting this methodology. It provides the first publicly available guidance specifically designed for banks to assess the risks and opportunities a low-carbon economy transition might pose to their lending portfolios.
This is the first of two methodologies to assist banks in responding to the final recommendations by the Financial Stability Board’s (FSB) Task Force on Climate-Related Financial Disclosures (TCFD). A further methodology, currently being developed by Acclimatise and the banks, will be released in June and provide guidance on physical climate risks and opportunities.