{"id":16000,"date":"2017-05-04T16:07:42","date_gmt":"2017-05-04T14:07:42","guid":{"rendered":"https:\/\/preprod.i4ce.org\/publication\/how-could-financial-actors-manage-their-exposure-to-climate-risks\/"},"modified":"2022-10-07T16:24:49","modified_gmt":"2022-10-07T14:24:49","slug":"manage-exposure-climate-risks","status":"publish","type":"publication","link":"https:\/\/staging.i4ce.org\/en\/publication\/manage-exposure-climate-risks\/","title":{"rendered":"How could financial actors manage their exposure to climate risks?"},"content":{"rendered":"<h2>Financial actors should integrate a forward-looking climate assessment into their procedures and models<\/h2>\n<p>In order to manage climate-related issues in their portfolios, financial actors will need in the long run to incorporate a forward-looking analysis for alignment of their portfolios with a 2\u00b0C pathway into their risk management and investment decision-making processes. Such analysis would need to be based on scenarios that represent different pathways for decarbonisation of the economy, and more specifically a 2\u00b0C pathway, broken down into quantitative variables of financial impact of the risks and opportunity for low-carbon transition.<\/p>\n<h2>A number of constraints currently limit their ability to conduct such an assessment<\/h2>\n<p>However, certain constraints currently restrict the possibility for financial institutions to carry out such analysis for all of their outstanding investment and financing amounts: the lack of forward-looking information on companies and other counterparties; certain current features of financial models; the lack of breakdown of climate-related scenarios into financial impact variables; the information systems of financial players which need to be adapted; and the lack of training on climate-related issues for their personnel.<\/p>\n<h2>However, financial actors should begin today to implement initial actions<\/h2>\n<p>Nonetheless, financial players can start as of today to progressively roll out a certain number of preliminary actions:<\/p>\n<ul>\n<li>Encouraging their counterparties to issue forward-looking information on their own alignment with a 2\u00b0C pathway, for example by following initial TCFD guidelines;<\/li>\n<li>Adopting an internal stance on scenarios on which analyses are to be based, in particular \u201c2\u00b0C\u201d scenarios, and thinking about the objectives to be set for each business sector;<\/li>\n<li>Adapting information systems so as to be able to collect, store and aggregate new indicators and information on the climate-related issues of counterparties;<\/li>\n<li>Adapting the financial models used;<\/li>\n<li>Training all employees on the impacts of climate-related issues for the financial sector;<\/li>\n<li>Collecting and analysing the climate-related indicators already available, as detailed in Climate Brief no. 46;<\/li>\n<li>Putting in place a governance system that will encourage climate-related issues to be taken into consideration by each internal business division.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Financial actors should integrate a forward-looking climate assessment into their procedures and models In order to manage climate-related issues in their portfolios, financial actors will need in the long run to incorporate a forward-looking analysis for alignment of their portfolios with a 2\u00b0C pathway into their risk management and investment decision-making processes. Such analysis would [&hellip;]<\/p>\n","protected":false},"featured_media":49199,"template":"","meta":{"_acf_changed":false,"inline_featured_image":false},"type_publication":[50],"class_list":["post-16000","publication","type-publication","status-publish","has-post-thumbnail","hentry","type_publication-climate-brief"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How could financial actors manage their exposure to climate risks? - I4CE<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.i4ce.org\/en\/publication\/manage-exposure-climate-risks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How could financial actors manage their exposure to climate risks? - I4CE\" \/>\n<meta property=\"og:description\" content=\"Financial actors should integrate a forward-looking climate assessment into their procedures and models In order to manage climate-related issues in their portfolios, financial actors will need in the long run to incorporate a forward-looking analysis for alignment of their portfolios with a 2\u00b0C pathway into their risk management and investment decision-making processes. 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