Embedding Environmental Factors In Strategy And Risk Management: For Banks, A Long Journey Just Begun

Challenges facing banks include lack of robust environmental performance data. Bank analysts are trying to understand bank’s exposure climate and environmental risk. Rating agencies are increasingly considering banks’ ability to manage climate environmental risk. The Bank of Italy published a survey of 25 banks in February 2020 highlighting the need for progress in banks’ ability to manage risk related to mitigation of and adaptation to climate change. Financial institutions have been increasingly active in the issuance of green bonds but their ability to measure, manage and report environmental and climate risk must evolve. Financial institutions are encouraged to implement comprehensive TCFD disclosures to support comparability and market discipline.