With ongoing focus from a variety of stakeholders on sustainability, banks need to be looking for ways to focus their operations to be more conscious of sustainable practices. This will especially be needed if the capital regime creates incentives as noted in yesterday’s post. Fortunately there are many examples of best practice available to consider.
There is probably no better endorsement of the importance of focusing on climate risk than having a major consulting company publishing their thoughts. Whilst this has the goal of securing clients to use their services to implement better management of climate risk, it does provide useful insight into opportunities. McKinsey and Company published in depth research on these risk on 1 June. This article is a good summary of issues to address and helpful reading for any bank looking to up their game in managing climate risk in their portfolios and activities.
The Sustainable Financing Platform in the Netherlands is less commercially oriented than McKinsey. They have published a paper highlighting the opportunities and risks for financial institutions from addressing issues of biodiversity. This is a very practical paper with concrete examples from the financial institutions that comprise the platform on their own practices. Thanks to Gijs for sending this link through.
Overall the increased interest in the issue of climate risks shows that the banking world is in transition. It is increasingly focused on how to address this risks. Hopefully banks have not waited too long to develop this focus.
