FSB issues progress report on climate risk efforts

The Financial Stability Board today issued a progress report on its work to implement its roadmap for addressing climate-related financial risk. Specifically, the report noted that significant progress has been made toward establishing global baseline climate reporting standards, with the newly established International Sustainability Standards Board issuing exposure drafts addressing climate and general sustainability-related disclosure statements.

The FSB also said that it is continuing work on improving the availability and cross-border comparability of climate-related data; using scenario analysis to monitor climate-related vulnerabilities; and introducing supervisory risk management expectations and guidance regarding climate-related financial risk.

FSB acknowledged that “the understanding of the financial risks arising from climate change and the policy approaches needed to address them remains at an early stage” and that “there continues to be a need for strong international coordination of actions in the coming year (and beyond) because of the importance of this issue for the global financial system.”

The work of the FSB and ISSB is influential to what is ultimately implemented at the national level by prudential regulators for large, internationally active firms and other agencies.