Financial Services

The Road to Action: Financial regulation addressing climate change

July 10, 2017

Global

July 10, 2017

Global
Renée Friedman

EMEA

Renée Friedman joined The Economist Group in July 2016 as a Managing editor for EMEA.  Her work focuses on thought leadership programmes for the financial services sector.

Prior to joining The Economist Group, Renée worked in a variety of roles: in Economic and Political risk consulting, in finance in the City of London as an Economist, a Macro strategist and a Bond fund manager,  in the  international and UK domestic policy spheres as an Economist to the Treasury Select Committee at the House of Commons and as Senior Economist and Chief Technical Advisor for the UN Development Programme’s (UNDP) Regional Bureau for Europe and the CIS,  and as an academic, designing and teaching economics courses at universities across London.

Renée has spoken on a variety of panels  and events focused on Russia, Ukraine and other emerging market economies including those for BNE Intellinews, IHS Global Insight, the IMF Poverty Reduction Strategy meetings, and for the UNDP. She has also appeared on CNBC.

Renée holds a PhD in Economics from London Business School, a Masters in Russian and East European Studies from the University of Birmingham, and a Bachelors in International Trade and Development from the London School of Economics & Political Science.  She is also a Prince 2 certified project manager. In addition to her native English, Renée speaks Russian.

Contact

Our report finds that investors, asset managers and banks urgently need a way to identify and measure how companies are responding to the risks of climate change

 

The cost of inaction: Recognising the value at risk from climate change, a July 2015 report written by The Economist Intelligence Unit (The EIU) and sponsored by Aviva, identified the need for a framework to govern the disclosure of climate-related financial risk.

Since that report was published, several significant events have taken place including the historic agreement on a global warming limit at the Paris Climate Conference (officially known as the 21st Conference of the Parties, or COP21), its early adoption by 55 countries and the European Union and the US administration's subsequent decision to withdraw its support from the agreement. 

In this follow-up report, also sponsored by Aviva, we review the issues relating to climate-related financial disclosure and investigate the mandates of ten different international, EU and UK financial institutions, all with very different focuses and mandates, to consider what role they play, or could play, in supporting climate-related financial risk reporting.

We also review the recommendations put forward by the TCFD and consider how climate-related financial disclosure can be set into the UN’s broader Sustainable Development Goals (SDGs), rather than being siloed into green finance-related policies and regulations. 

Key findings from the report include:

  • Banks, asset managers, industry and governments—and, in the US, individual states—will continue to need to work with regulators to determine what information is required to ensure that investors have sufficient knowledge of the risks affecting their portfolios, and which regulatory authority will be held accountable to implement such rules.
  • Based on their collective and individual commitments to ensuring financial stability, global, regional and national standard-setting and regulatory institutions can all play a role in ensuring that the Paris target is met.
  • There remains a lack of international consensus on what constitutes a material climate risk, particularly at the sector, subsector and asset-class level. Reporting on materiality is therefore ambiguous and unregulated.
  • Internationally accepted, integrated accounting standards which incorporate climate-change-related risks would reduce investor and financial stability risks.
  • Standardised and regulated scenario analysis is needed to allow asset owners and asset managers to understand how climate change would affect investment return.

Enjoy in-depth insights and expert analysis - subscribe to our Perspectives newsletter, delivered every week