Major economies must act to avoid environmental and financial risk

7th September 2016


Related Topics

Related tags

  • Fossil fuels ,
  • Finance ,
  • Natural resources ,
  • Politics & Economics

Author

Jack Millard

World leaders at the G20 summit welcomed plans to increase private investment in environmental measures, but institutional risk and market barriers to green finance remain, according to new report.

The report, from the Cambridge Centre for Sustainable Finance, which is a ‘knowledge partner’ to the G20 Green Finance Study Group (GFSG), provides a global stocktake of the tools and techniques that financial institutions are developing to analyse environmental risks.

The stocktake incorporates numerous examples of financial and other sectors under two categories:

physical risks, such as climate change and other events that change ecological equilibria; and, transitional risks arising from efforts to address environmental change, including pubic policies and investor sentiment and disruptive business models.

The report’s findings show that green innovation is already happening in the financial sector, but it is at the margins of mainstream practice. For example, UK-based insurers have quantified how extreme weather events can drive food price spikes and hit stock markets around the world.

There are also challenges to integrate such measures into mainstream practice and the report says regulation may be needed. Multi-disciplinary expertise, which is essential for processing relevant data in order to build financial impact analysis, is rarely available within a single institution, it finds.

Recommendations include establishing formal structures to accelerate action on environmental and financial risks across banking, investment and bond markets. ‘Governments and regulators need to help build capacity in local markets, plug knowledge gaps, improve data and level the playing field,’ the report concludes.

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

EU and UK citizens fear net-zero delivery deficit

Support for net zero remains high across the UK and the EU, but the majority of citizens don't believe that major emitters and governments will reach their climate targets in time.

16th May 2024

Read more

There is strong support for renewable energy as a source of economic growth among UK voters, particularly among those intending to switch their support for a political party.

16th May 2024

Read more

Taxing the extraction of fossil fuels in the world’s most advanced economies could raise $720bn (£575bn) by 2030 to support vulnerable countries facing climate damages, analysis has found.

2nd May 2024

Read more

The largest-ever research initiative of its kind has been launched this week to establish a benchmark for the private sector’s contribution to the UK’s 2050 net-zero target.

2nd May 2024

Read more

Weather-related damage to homes and businesses saw insurance claims hit a record high in the UK last year following a succession of storms.

18th April 2024

Read more

The Scottish government has today conceded that its goal to reduce carbon emissions by 75% by 2030 is now “out of reach” following analysis by the Climate Change Committee (CCC).

18th April 2024

Read more

The Science Based Targets initiative (SBTi) has issued a statement clarifying that no changes have been made to its stance on offsetting scope 3 emissions following a backlash.

16th April 2024

Read more

While there is no silver bullet for tackling climate change and social injustice, there is one controversial solution: the abolition of the super-rich. Chris Seekings explains more

4th April 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close