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Climate Change Is A Key Priority To The G20 And Financial Stability Board

Climate Change Is A Key Priority To The G20 And Financial Stability Board

Addressing climate-change related risks and how they can impact financial institutions is a significant priority in this year’s Group of 20 (G20) presidency. In a letter sent to the G20 Finance Ministers and Central Bank Governors ahead of their April 7 meeting, Financial Stability Board (FSB) Chair Randal Quarles stated that addressing issues related to climate change “is essential to a sustainable recovery from the COVID Event and beyond.” The FSB is an important financial systemic standard setter which coordinates national financial authorities and international standard-setting bodies while they develop strong regulatory, supervisory and important financial sector policies.

The G20 has requested that the FSB complete two reports by July “on ways to promote consistent, high quality climate disclosures based on the recommendations of the Task Force for Climate related Financial Disclosures (TCFD), and on the data necessary for the assessment of financial stability risks and related data gaps.” In 2015, the FSB created the TCFD so that it could create disclosure recommendations for use by companies voluntarily to provide information to investors, lenders and insurance underwriters about the climate-related financial risks that companies face. I look forward to reading these reports, because climate disclosures and data to assess risks to financial stability are essential to prepare financial institutions to mitigate climate-related risks. Natural catastrophes have caused billions of losses to financial institutions.

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