Category: Finance

Event summary: Advancing TCFD guidance on physical climate risks and opportunities

Event summary: Advancing TCFD guidance on physical climate risks and opportunities

On 31st May 2018, the European Bank for Reconstruction and Development (EBRD), in partnership with the Global Centre of Excellence on Climate Adaptation (GCECA), held the conference Advancing TCFD Guidance on Physical Climate Risks and Opportunities. The EBRD welcomed the opportunity to host this event as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD). The EBRD is the first multilateral development bank to officially join over 280 supporter organisations in becoming a supporter of the TCFD and of its recommendations on including climate-related information – both risks and opportunities – in financial disclosures.

The event launched the EBRD-GCECA report that builds on the TCFD recommendations and presents practical guidance for corporates looking to disclose their risks and opportunities with regard to physical climate impacts. This report is the result of a six-month dialogue between industry-led working groups composed of representatives of corporates, financial institutions and regulators.

In light of the report’s 18 recommendations, the conference facilitated discussion and reflections on the relevance of physical climate-related risks and opportunities to financial markets. Three panels, gathering corporations, banks, regulators, asset managers, rating agencies, and others were convened to discuss the practical implementation of physical climate-related disclosure metrics by corporations.

Download the flagship conference report and other conference materials.

Event summary

The conference was opened by Josué Tanaka, EBRD Managing Director, and Pierre Heilbronn, EBRD Vice President, who welcomed the audience and set the scene by highlighting EBRD’s long-standing commitment to financing the transition to a low-carbon and climate-resilient economy.

Henk Reinders, speaking on behalf of the Dutch Central Bank DNB, stressed the role that regulators must play regarding physical risk. Curtis Ravenel, Global Head of Sustainable Business and Finance at Bloomberg, presented TCFD recommendations related to physical climate risks and opportunities, and the challenges related to their eventual identification on balance sheets. Roelfien Kuijpers, Head of Responsible Investments and Strategic Relationships at DWS, encouraged investors to address physical climate disclosures through shareholder engagement to support a “just transition” that addresses the equity implications of repricing exposed assets. She also called on regulators to support this effort by requiring sector-based climate-related disclosure protocols and helping develop a new climate analytics industry.

The first panel ‘Advancing TCFD recommendations on physical climate risks and opportunities’ gathered the three chairs of the working groups who presented the EBRD-GCECA report’s findings. Murray Birt, DWS, stressed the importance of assessing climate risks over longer timeframes of assets and instruments, disclosing information on the location of critical facilities, providing detailed information on the financial impacts of recent extreme weather events and weather variability on facilities and value chains, as well as forecasting financial impacts of future physical climate risks. Simon Connell, Standard Chartered Bank, focused on opportunities, defined as increasing the resilience of existing assets to current and future physical climate risks, along with identifying new markets and product demand that may emerge as a result of shifting climate patterns. He highlighted the importance of identifying and disclosing physical climate-related opportunities at the segment level as well as wider co-benefits from climate resilience investments. Greg Lowe, Aon, explained that physical climate scenarios constitute a critical tool to ensure better capital allocation, as they provide useful views of plausible futures. As such, the analysis of physical climate scenarios requires an exploration of different GHG pathways and their impacts on climate and weather systems. Finally, Craig Davies, EBRD, presented the Bank’s efforts to support market transformation toward climate resilient economies by mobilising wider market action through developing new ways of sharing market information about physical climate change impacts.

The second panel ‘Managing physical climate risks and opportunities – experience to date’ brought together physical climate risk disclosure preparer and user perspectives, as Maersk, Citi, Bank of America Merrill Lynch, and Moody’s shared their experiences on the management of physical climate risks and opportunities. While their experiences to date varied, panellists all welcomed the TCFD framework as a means to bring physical climate risks and opportunities under deeper scrutiny in their organisations. The need for engagement emerged as an important theme from the panel. The interdependencies between financial institutions and corporates, and in turn between corporates and their supply chains, was said to require new relationships and engagement at multiple levels – both externally and internally. Another takeaway was the desire to strike the right balance between disclosures that are useful for financial institutions and for corporates’ strategic purposes. In these early stages of physical climate risk analysis and disclosure, what is truly ‘decision useful information’ is yet to be determined, though panellists maintained that the new EBRD-GCECA report goes a long way to provide guidance on this issue.

The third panel ‘How to include physical climate risks and opportunities in financial disclosure’ capped the event, bringing together financial regulators and government actors, as well as the voluntary disclosure perspective. Jean Boissinot, French Treasury, noted that while there is now room for further regulation on physical climate risk disclosures, regulators need to think carefully about it to ensure it results in information that is complementary, enabling information flows, and is aligned with other initiatives such as the TCFD. Mark Cornelius, Bank of England, discussed the Bank’s current information gathering initiative in the insurance and banking sectors and ensured the Bank and its regulatory functions are highly supportive of initiatives like TCFD that are by and for the market. Simon Messenger, Climate Disclosure Standards Board, commented that stronger regulation can help standardise physical climate-related disclosures. Antoine Begasse, European Commission, agreed that regulators have a role to play, but that regulation needs to be fit for purpose to generate comparable information from industry. In this light, the Commission is launching a public consultation on strengthening reporting requirements, and developing a taxonomy of adaptation (and mitigation) finance including metrics to be used in climate-related disclosures, to be integrated into regulation and to support climate-related reporting.

Closing remarks were provided by Roald Lapperre, Deputy Minister at the Netherlands Ministry of Infrastructure and Water Management, Curtis Ravenel of Bloomberg, and Josué Tanaka of EBRD. The host concluded that the disclosure process is happening, and that TCFD and the emerging EU sustainable finance approach provide useful frameworks. It was also recognised the tension between the need for consistency and the need for sector-specific metrics. Ultimately, there is high demand to translate awareness of physical climate risks and opportunities into metrics that can influence the decisions made by businesses and financial institutions.

Key Takeaways

  • Physical climate-related disclosures are part of an iterative process and constitute a learning exercise for corporations and financial institutions. They will need to include both quantitative and qualitative elements, to avoid the publication of commercially-sensitive data related to the provision of detailed climate risk information.
  • Disclosures and scenario analysis are not an end per se. The analysis of physical climate risks and opportunities should be about strategic analysis as much as it should be about disclosure.
  • There is a general need for better and more granular data provision on corporates’ facilities, their importance and their location. The information can come from universities and analytics firms as well as from better engagement between investors and clients.
  • Better disclosures of physical climate risks and opportunities will arise from a cooperative working process to ensure learning and awareness-raising between the following actors: banks (involving all teams including credit risk, industry teams and sustainability departments), investors asking questions to companies in which they invest, along with the latter assessing their whole value chain.
  • The long-term horizon is relevant for physical climate scenario analysis, as due diligence processes usually entail longer timeframes, and relationships with clients extend over the longer term.
  • The development of guidance and protocols on physical climate-related disclosures should be pursued. They should support market participants in increasing their climate risk awareness and the focus includes both acute and chronic physical climate risks. Regulators need to ensure that any new climate disclosure regulation results in information that is complementary, enabling information flows, and aligned with other initiatives such as TCFD.
  • MDBs have a role to play in ensuring that emerging economies are not left behind as new regulatory and market practices on climate-related disclosures emerge. They can support businesses and financial institutions in emerging markets to adopt and keep up with evolving best international practices on climate-related disclosures, for example through supporting skills transfer, capacity building and policy dialogue, as well as exploring the development of new financing instruments that include e.g. the appropriate use of concessionality and calibrated loan pricing.
  • The TCFD provides a useful framework for the analysis of climate risk and opportunities. Together with the EU sustainable finance approach, it is the push many corporates need to get started on their journey to uncover physical climate risks and opportunities. Growing awareness on physical climate risks and opportunities needs to translate into the development and use of robust metrics that inform better market decisions and the more rational allocation of capital in the light of information about physical climate change impacts.

Download the flagship conference report and other conference materials.


More on the initiative

The initiative was hosted by EBRD which also funds its technical secretariat. The GCECA provided a secondment to the technical secretariat. The technical secretariat was facilitated by Acclimatise, a specialist consulting company advising major corporates and financial institutions on climate risk and resilience, and by Four Twenty Seven, a firm providing market intelligence on the economics of climate change.

Participants involved in the expert working groups included: Agence Française de Développement, Allianz, APG Asset Management, AON, the Bank of England, Barclays, Blackrock, Bloomberg, BNP Paribas, Citi, Danone, the Dutch National Bank, DWS Deutsche AM, European Investment Bank, Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, S&P Global Ratings, Shell, Siemens, Standard Chartered, USS and Zurich Alternative Asset Management.


Information about further updates and events will be posted on the website www.physicalclimaterisk.com. If you require further information about any of these activities, please contact physicalclimaterisk@ebrd.com.

The event attracted significant media attention and was reported by the New York Times, Reuters and Environmental Finance.

Major new report on physical climate risk to financial sector released

Major new report on physical climate risk to financial sector released

Financial institutions should undertake comprehensive climate risk assessments and disclose material exposure to climate hazards such as flood risk, water stress, extreme heat, storms, and sea level rise, according to a new report released today by the European Bank for Reconstruction and Development. The report focusses specifically on physical climate risks to the financial sector and calls for firms to integrate climate impacts into investment decisions.

The report, published today at a conference hosted by EBRD and the Global Centre for Excellence on Climate Adaptation (GCECA), presents guidance and recommendations developed over the last year by industry-led working groups that include representatives from AFD Allianz, APG, Aon, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, Danone, DNB, DWS, The Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, the OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich Asset Management. An expert team led, by Acclimatise and Four Twenty Seven served as the secretariat to the working groups throughout the course of the meetings.

The report, Advancing TCFD guidance on physical climate risks and opportunities”, also recommends that firms investigate benefits from investing in resilience and opportunities to provide new products and services in response to market shifts. In order to do this, the report calls for organisations to use scenario analysis and incorporate long-term climate uncertainties into business planning and strategic decisions.

The report and the conference, respond to calls for strengthening financial stability in the face of climate change uncertainties, through the disclosure of climate-related market information.  This was the core message, delivered last summer, of the Task Force on Climate-Related Financial Disclosures (TCFD), initiated by the Financial Stability Board (FSB) in response to a call from the G20 economies.


The report is available on a dedicated website www.physicalclimaterisk.com, as are opinion pieces from heads of working groups and other leading experts.

Download the report’s executive summary here.

Cover photo by Ryan L.C. Quan/Wikimedia Commons (CC BY-SA 3.0): Looking downtown from Riverfront Ave in Calgary, during the Alberta floods 2013.
TCFD recommendations: EBRD to host physical climate risk conference on 31 May

TCFD recommendations: EBRD to host physical climate risk conference on 31 May

By EBRD

The European Bank for Reconstruction and Development (EBRD) and Global Centre of Excellence on Climate Adaptation (GCECA) are hosting an event “Advancing TCFD guidance on physical climate risk and opportunities”, which will be held on 31 May 2018 at the EBRD’s headquarters in London.

Findings about physical climate risk and opportunity disclosure by industry-led working groups, which have been meeting at the EBRD’s headquarters since 2017, will be released at the conference.

This event will build on the recommendations of the TCFD, headed by Mark Carney and Michael Bloomberg. These recommendations highlight a growing concern over the effects of climate change on the economy and financial markets, and the need for investors to be able to assess climate-related risks.

At the conference, senior representatives from the financial, business and regulatory communities will discuss the development of metrics for disclosing physical climate risk and opportunities, and the integration of these disclosures into decision-making.

The confirmed high-level speakers at the conference will include:

  • Suma Chakrabarti, President, the EBRD
  • Roald Lapperre, Netherlands Deputy Minister for Infrastructure & Water
  • Frank Elderson, Executive Director, DNB (Netherlands Central Bank).

The panelists will represent a rich variety of market leaders such as Aon, Citi, Google, Maersk, Moody’s and Standard Chartered, as well as the Bank of England, the French Treasury and the European Commission.

Findings from the expert working groups will also be published. The working groups include representatives from Allianz, APG, Aon, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, DNB, DWS, Lightsmith Group, Lloyds, Meridiam Infrastructure, Moody’s, OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich Asset Management. An expert team led by Acclimatise and Four Twenty Seven is providing the Secretariat function to the working groups.

TCFD recommendations, released for the G20 summit in June 2017, call for the inclusion of metrics on physical climate risk and opportunities into financial disclosures by corporations and financial institutions. This is echoed in the recommendations of the European Union’s High Level Expert Group on sustainable finance, released in January 2018, and the Action Plan from the European Commission released in March 2018.


Read the original press release on the EBRD website.

Cover photo by Riccardo Chiarini on Unsplash
New knowledge hub helps companies implement TCFD recommendations

New knowledge hub helps companies implement TCFD recommendations

By Elisa Jiménez Alonso

The newly launched TCFD knowledge hub hosts a range of resources that help companies identify, analyse and report climate-related financial information. It was created to support the implementation of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the development of high-quality, consistent and comparable climate-related financial disclosures.

The hub offers two main ways to access resources:

  1. Search the database to find a specific resource relating to the themes and topics covered in the TCFD recommendations.
  2. Be guided through the 4 thematic areas, the recommended disclosures and scenario analysis with helpful suggestions of the most relevant resources to start implementing the recommendations.

Acclimatise supported the launch of the TCFD Knowledge Hub by providing a range of relevant resources that are now available through the portal. We welcome this new library of resources supporting the adoption of the TCFD recommendations by a wide range of companies. As our CEO John Firth states “The ability of firms to embrace climate risks and opportunities, and factor them into strategic planning will not only improve their performance, but will create a more resilient banking sector and economy.”

Acclimatise is co-leading a United Nations Environment Programme – Finance Initiative (UNEP FI) project exploring climate-related risks and opportunities for financial institutions. The project has a Working Group of 16 leading international banks and will produce a harmonized methodology for banks that will help them strengthen their assessments and disclosure of climate-related risks and opportunities. A methodology providing guidance on physical climate risks and opportunities is currently being developed by Acclimatise and the banks and will be released in June.

Visit the TCFD Knowledge Hub: www.tcfdhub.org


Cover photo by Tobias Fischer on Unsplash
New methodology helps banking industry better manage and report low-carbon economy transition risks

New methodology helps banking industry better manage and report low-carbon economy transition risks

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.

Download the methodology by clicking here.


Access the UN Environment press release by clicking here.

Access the publication on the UNEP FI website by clicking here.

Cover photo by Kai Gradert on Unsplash.
Mark Carney warns of ‘catastrophic’ climate impact to financial system

Mark Carney warns of ‘catastrophic’ climate impact to financial system

By Georgina Wade

Bank of England governor Mark Carney warns that firms must come clean on their exposure to climate change risk or face the “catastrophic impact” it could have for the financial system.

While speaking at a summit of central bank governors in Amsterdam, Carney urgently called for a full disclosure of climate vulnerabilities before rapid adjustments are forced upon the industry which could result in steep losses.

“Once climate change becomes a clear and present danger to financial stability, it may already be too late,” Carney said. “Our responsibility is to work in a way that puts the financial system as a whole in a position, so it can adjust in a smooth and effective and orderly fashion as climate policies adapt.”

Following the Paris climate agreement in 2015, European financial supervisors have been increasingly inspecting the banking and insurance sectors to understand their vulnerability to climate risks and their readiness for a transition to a low-carbon energy system. Since then, central bank governors have been considering carbon stress tests for banks.

Carney says the Bank of England will contemplate carbon stress tests of banks after its review of the sector’s exposure to climate-related risks is completed this year, noting that this development would most likely happen over time. Although it is not known what this new review will entail or if it would result in a public report, the central bank said the work would be carried out in a similar way to its assessment of insurance companies launched in 2014, an effort that included a mix of internal research, surveys and meetings with selected companies.

Carney’s warning comes on the back of 2017, which was defining for the finance sector and how it will handle climate change in the future. Most prominently, in June 2017, the Task Force on Climate-related Financial Disclosures (TCFD), set up by the Financial Stability Board in 2015, published its final recommendations to help companies disclose climate-related risks and opportunities.

2017 was also marked by weather extremes around the world, likely due to climate change, which also impacted the financial sector. For example, Lloyds Bank reported having paid out £4.5 billion last year for large claims net of reinsurance, more than double their losses in 2016.


Acclimatise is co-leading a United Nations Environment Programme – Finance Initiative (UNEP FI) project exploring climate-related risks and opportunities for financial institutions. The project has a Working Group of 16 leading international banks and will produce a harmonized methodology for banks that will help them strengthen their assessments and disclosure of climate-related risks and opportunities.

Cover photo by George Rex (CC BY 2.0).
Scaling up municipal finance to meet the global urbanisation challenge

Scaling up municipal finance to meet the global urbanisation challenge

By Caroline Fouvet

Rapid urbanisation, especially in developing countries, is leading to a range of difficult challenges which are further complicated by the effects of climate change. This has put the role of municipal finance in the spotlight as subnational and local entities might be best placed to deal with urban issues and allocate resources.

According to recent research, over 100 cities will have populations larger than 5.5 million people within the next 35 years, most of them in developing countries. Questions then arise on how to ensure those new urban centres will become sustainable living spaces and avoid pitfalls such as substandard housing conditions, uncontrolled pollution, air contamination, restrained access food and water, and poverty and unemployment. As climate change compounds such issues and places the developing world in a vulnerable position, it is necessary for cities to mobilise the resources that will help them face this situation.

One of the potential options is scaling up municipal finance, which was promoted during the United Nations-HABITAT’s 9th World Urban Forum in Malaysia last month and highlighted the need to raise subnational investments to meet the Sustainable Development Goals (SDGs) by 2030.

Municipal finance is described as “the revenue and expenditure decisions of municipal governments” and materialised through financial tools such as equity finance, pooled finance arrangements, municipal bonds, public-private partnerships (PPPs) and crowdfunding. Catalysing the use of those instruments is an option to secure long-term investments in critical infrastructures and overall sustainable urban development, as cities may face various constraints to raise local revenue sources and take on debt.

Green bonds, which fund green infrastructures, can for instance provide cities with lower capital expenditure levels for sustainable projects, and help them overcome restricted financial capacities. In 2016, Mexico City issued the first municipal green bond in Latin America to finance transit improvements and energy-efficient street lighting, which actually became oversubscribed as the bonds sold could not meet the investors’ demand. Although both mitigation and adaptation measures can be financed through green bonds, the largest share of proceeds has so far been allocated to urban transport and water systems, with adaptation projects only amounting to 5% of the overall use.

Municipal finance, however, has to address several challenges arising from those innovative instruments. The design of PPPs must for instance undergo scrutiny to avoid being poorly designed, hence leading to costly service coverage, poor service quality or fiscal liabilities. A balanced budget is also a necessary requirement for subnational entities to avert financial difficulties when implementing urban projects and to demonstrate that no bail out from central authorities will be required. In addition, good governance is a sine qua none condition to ensure that resources are transparently and properly managed.

To achieve the UN’s 2030 agenda, and in particular SDG 11 “Make cities inclusive, safe, resilient and sustainable”, municipalities are at the forefront of action. Allocating municipal resources to low-carbon, climate resilient projects and diversifying financial instruments can contribute to the efforts of facing the urbanisation challenge.


Cover photo by Andrés Gerlotti on Unsplash
Climate risk disclosure can help companies create competitive advantage

Climate risk disclosure can help companies create competitive advantage

By Caroline Fouvet

Businesses across all sectors will be affected by climate change. Corporations, from Starbucks to Google, will be affected by climate impacts that can disrupt their supply chains and damage their physical infrastructure. However, comprehensive climate change adaptation assessments and strategies are infrequently considered as part of companies’ business plans. As suggested by Professor Michael Porter, the perception of “an inevitable struggle between ecology and the economy” leads some companies to be wary of environmental regulations, often viewing them as expensive procedures that lie outside of core business planning.

Professor Porter, however, disagrees and claims that there is a complementary relationship between environmental protection and business.  He argues that companies that pay attention to environmental risks are likely to be more competitive. The ‘Porter hypothesis’, formulated in the 1990s, is still relevant today especially with the implementation of disclosure policies on climate change–related risks gaining traction.

In July 2015, France introduced mandatory climate disclosure requirements as part of its law on “energy transition for green growth”. Institutional investors must now report on how their investment policies integrate climate change considerations, and where applicable, climate risk management. This was followed the following year by legislation passed by the European Union’s parliament targeting pensions funds and requiring them to include climate change in their investment strategies. Climate disclosure requirements could help companies to be prepared for emerging climate risks and increase their resilience.

Furthermore, in 2017 the Financial Stability Board’s Task Force on Climate-related Financial Disclosures published its final recommendations to help companies disclose climate-related risks and opportunities. Following the release of these recommendations, a group of 16 leading banks is participating in a UNEP Finance Initiative project, co-lead by Acclimatise and Oliver Wyman, that is developing a methodology for the banks to help them strengthen their assessments and disclosure of climate-related risks and opportunities.

Although the businesses are becoming increasingly aware of climate risks to their operations, there remains plenty of room for progress. For example, even though the insurance sector is particularly vulnerable to climate-related risks, its business strategy does not shield it from the impact of climate change. A study shows that many assets are becoming uninsurable, leading to an estimated US$ 100 billion ‘protection gap’ – the difference between the costs of natural disasters and the amount insured.

Assessing the impact of climate change on investments and adapting business strategies accordingly can help businesses save money in the medium-long term. For that to happen, it is up to governments to implement disclosure requirements. For companies it is important to pre-empt such regulation, and take early action to reduce climate risks to both core operations and supply chains.


Cover photo by Dan Schiumarini on Unsplash.
EBRD & GCECA event: Advancing TCFD guidance on physical climate risk & opportunities

EBRD & GCECA event: Advancing TCFD guidance on physical climate risk & opportunities

The European Bank for Reconstruction and Development (EBRD) and the Global Centre of Excellence on Climate Adaptation (GCECA) are hosting an event “Advancing TCFD guidance on physical climate risk and opportunities”, which will be held on 31 May at the EBRD’s headquarters in London. This event will build on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which crystallised a growing concern of investors and business leaders over the physical impacts of climate change on the economy and financial markets.

The TCFD’s final recommendations, released for the G20 summit in June 2017, recommended the inclusion of metrics on physical climate risk and opportunities into financial disclosures and called for further research and concrete guidance over what the appropriate metrics should be. Corporations and financial institutions need to agree on common metrics to ensure transparency and data comparability. Since then, the recommendations of the European Union’s High Level Expert Group on sustainable finance, released in January 2018, have also highlighted the need for a common taxonomy on climate change adaptation and metrics for physical climate risk and opportunity disclosures.

This event will be a forum for senior representatives from the financial and business community to discuss and identify the way forward for the development of metrics for disclosing physical climate risk and opportunities, as well as pointers for integrating physical climate risk considerations in scenario-based decision making by businesses and financial institutions.

The conference is sponsored by the EBRD and GCECA, and will feature the findings from expert working groups that include representatives from Allianz, APG,AON, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, DNB, Deutsche Asset Management, Lightsmith Group, Lloyds, Meridiam Infrastructure, Moody’s, OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich AM, Acclimatise and 427 are providing the Secretariat function.

A detailed agenda will be circulated in due course. Please note that this is an invitation only event. More information can be found on EBRD’s website.


As member of the technical secretariat, Acclimatise is closely involved in the preparation of this event.

Acclimatise is also co-leading a United Nations Environment Programme – Finance Initiative (UNEP FI) project exploring climate-related risks and opportunities for financial institutions. The project has a Working Group of 16 leading international banks and will produce a harmonized methodology for banks that will help them strengthen their assessments and disclosure of climate-related risks and opportunities.

Cover photo by Jamie Street on Unsplash
Final HLEG on Sustainable Finance recommendations: Climate risks can no longer be ignored

Final HLEG on Sustainable Finance recommendations: Climate risks can no longer be ignored

By Robin Hamaker-Taylor

On Wednesday 31 January, the High-Level Expert Group (HLEG) on Sustainable Finance released its final recommendations to the European Commission. The recommendations will inform the Commission’s strategy on sustainable finance, and its wider efforts to create enabling conditions for the EU to meet its targets under the Paris Agreement and goals of the 2030 Agenda for Sustainable Development. The Commission understands the financial sector has a key role to play in meeting these targets and goals, as private capital could be mobilised to help reach the €180 billion of additional investments needed per year to meet emissions targets alone.

The recommendations (listed below) centre around a series of themes which together create a multi-dimensional roadmap aiming to accelerate the shift to sustainable finance. These include the imperative of synchronising changes in the financial system with action in the real economy, as well as the need for financial institutions to ask clients and beneficiaries about their sustainability preferences and ethical values. Another theme is the need to connect the supply of capital with place-based priorities via suitable local bank networks, fintech, local authorities, communities, and others to develop investable pipelines of green assets (such as property and infrastructure) in vulnerable regions. A final imperative is extending the time horizons of financial decision making.

The Group’s set of eight key recommendations, include:

  1. Establish and maintain a common sustainability taxonomy at the EU level
  2. Clarify investor duties to better embrace long-term horizon and sustainability preferences
  3. Upgrade disclosure rules to make sustainability risks fully transparent, starting with climate change
  4. Key elements of a retail strategy on sustainable finance: investment advice, ecolabel and socially responsible investment minimum standards
  5. Develop and implement official European sustainability standards and labels, starting with green bonds
  6. Establish ‘Sustainable Infrastructure Europe’
  7. Governance and Leadership
  8. Include sustainability in the supervisory mandate of the European Supervisory Authorities and extend the horizon of risk monitoring

These recommendations will certainly work to do more than mobilise private capital toward sustainable projects, products, and companies. They have the potential to shift how the financial services sector thinks about physical climate change risks, first and foremost by encouraging a longer time horizon than is typically considered. Furthermore, the recommendation on climate risk disclosure (recommendation 3) builds on the voluntary Task Force on Climate Related Disclosure (TCFD) recommendations, highlighting the momentum being gained by analysis and disclosure of climate risks in the finance sector. Unlike the TCFD recommendations, the HLEG recommendations target the financial sector specifically in their disclosure recommendation, stating they recommend “to upgrade Europe’s disclosure rules to make climate change risks and opportunities fully transparent. A transparent financial system is a prerequisite for sustainable finance. An interconnecting framework of effective sustainability disclosure covering financial products, financial assets, financial institutions and financial authorities is thus essential.”

Some actors in the sector are leading the way with their efforts to analyse and disclose their climate risks. Acclimatise are working with a group of 16 international banks along with UNEP FI, to devise a methodology which they themselves, as well as other banks, can use to make these important disclosures against the TCFD recommendations. Our company is also part of the technical secretariat supporting a deeper exploration of the metrics needed to carry out climate risk and opportunity disclosures, as part of a new Global Centre of Excellence on Climate Adaptation (GCECA) and European Bank for Reconstruction and Development (EBRD) initiative. The GCECA and the EBRD have convened a set of experts in a series of working groups which aim to progress toward developing physical climate risk metrics, as well as climate resilience opportunity metrics. Both of these efforts will result in publicly available outputs, which can be used by both corporates and financial institutions in their efforts to analyse and disclose climate risks and opportunities.

The HLEG’s new recommendations are just another clear signal for the financial sector that climate change risks can no longer be ignored and have to be considered in order to build a climate resilient economy.

Download the HLEG on Sustainable Finance report by clicking here.


Cover photo by Thijs ter Haar/Flickr (CC BY 2.0).