FSB reports on climate change roadmap

FSB has published its first annual progress report in the roadmap for addressing financial risks from climate change.

FSB reported that good progress had been made against all four blocks of the roadmap:

  • Firm-level disclosures: the publication by the International Sustainability Standards Board (ISSB) of climate and general sustainability-related disclosure standards has been hailed as a milestone. The timely issuance of a final global baseline climate reporting standard ready for market adoption is critical given the global market demand for consistent, comparable and decision-useful disclosures on climate-related risks and opportunities. Alongside a global baseline reporting standard on climate, there is also a growing recognition of the importance of global assurance standards to drive reliability of disclosures.
  • Data: Work has continued on improving the availability and cross-border comparability of climate related data more broadly. A priority is to further coordinate the establishment of common metrics for financial risks (e.g. for financial stability analysis, supervisory reporting), including forward-looking metrics anchored in real-world climate targets. Going forward, it is important to establish data repositories that provide open access to data in a consistent form.
  • Vulnerabilities analysis: Work here has continued to progress along three strands – ongoing monitoring using the tools currently available, development of conceptual frameworks, and further development of scenario analysis. Further experience with building and using climate scenarios can help the monitoring of financial risks to appropriately account for the longer time horizons that climate-related risks may involve.
  • Regulatory and supervisory practices and tools: A number of initiatives have been completed or are well underway across the SSBs and relevant international bodies, including supervisory risk management expectations and supervisory guidance covering the banking, insurance and asset management sectors. Financial authorities should continue to embed the supervision of climate-related risks into overall supervisory frameworks, including the further development of the use of climate scenario analysis and stress testing exercises.

Harshil Patel