Climate risk: Analysis of annual and climate reports shows mixed results among banks

The vast majority of leading banks and asset managers have acknowledged the need to act on climate risk and have made progress, but much remains to be done in terms of practical implementation, according to analysis of annual reports, and, where available, sustainability and climate reports of 63 of the world’s leading banks and asset managers across Europe, North America and Asia.

The research, commissioned by Acin, shows that about two thirds of the firms analysed reference a corporate net zero target between 2025-50 in their reports. About a fifth of these organisations have gone further by setting a commitment to reach their net zero targets by 2035, some 15 years ahead of Paris Agreement targets.

About three quarters of the banks and asset managers analysed reference alignment with the Task Force for Climate-Related Disclosures and its principles. Just a handful make no reference at all to how they themselves were aligning or were planning to align with TCFD.

Many of the financial institutions analysed are capturing, publishing and acting on climate-related data today, as well as preparing for future impact of risks. Many are undertaking scenario analysis and specific risk assessment exercises for areas most likely to be affected by climate risks.

Commenting on the findings of the research, Paul Ford, CEO at Acin, said: “It is encouraging to see evidence of banks and asset managers responding to climate change. That said, the research clearly indicates some tough work ahead. Commitments are an essential first step, but we know from experience that embedding risks and controls in an organisation is challenging. Climate risk is an emerging discipline where roles and responsibilities may not yet be fully defined and the nature of the risks transcend financial and non-financial. Staying on top of what is clearly emerging regulation is not easy either. UK and European regulators expect to see climate risk embedded in 2022, if firms are to avoid capital adequacy implications.”

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