Climate change has far-reaching social and economic impacts, necessitating urgent and immediate action from various stakeholders including governments, corporates, financial regulator, and proactive action from financial institutions (FIs).
In the last few years, the momentum in the sector has built up to acknowledge that capital needs to shift to low-carbon activities. With regulatory and policy support, this has led to an increasing focus on channelling financial flows to climate action.
At the same time, there is an acknowledgement that risks posed by climate change to the economy could threaten the stability of the financial sector. Thus, FIs need to measure and manage these risks.
This brief explains some of the main ways in which FIs are responding to and participating in climate action.