CH4: Central Bankers Contribution to Climate Change Mitigation: Task Force on Climate-related Financial Disclosure (TCFD)
PHYSICAL IMPACT
Extreme weather, Disasters, Business disruption, Asset destruction, Migration,
TRANSITION IMPACT
Regulations, Technology, Consumer preferences
Lower value for stranded assets, energy price increase due to dislocation,
FINANCIAL LOSSES: Market loss, credit loss, underwriting loss, operational risks, liquidity risks
CENTRAL BANK ROLE
- Set interest rate
- Aid government achieve economic objectives
- Maintain financial stability
Ensure financial market price reflect all relevant RISKS
CLIMATE CHANGE RISK VS CREDIT RISK
- Far reaching impact
- Irreversible
- Foreseeable nature
- Dependent on short-term actions
TASK-FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD)
Climate Related Risk (CRR)
Recommended Disclosures
Guidance
Supplementary Guidance
Financial
Banks, Insurance, Asset Manager, Asset Owners
Non-financial
Energy, Transportation, Materials, Building, Food, Agricultural, Forest Products
Four THEMES: Governance, Strategy, Risk Management, Metrics and Targets
TRANSMISSION CHANNELS
Climate Risk to Financial Risks
MICRO: Affecting individual businesses and households
Property damage, stranded assets
MACRO: Aggregate Impacts on macroeconomy
The Finance Industry Transition to Sustainability: Climate Science, Societal Issues, Regulation & Accounting
Chapter 2: The Paris Agreement, 1.5 Degree Target versus Net Zero Target