On 22 July 2020, the Financial Stability Board (FSB) published a stocktake of financial authorities’ experience in including climate-related risks in financial stability monitoring. It draws on information provided by FSB member national authorities, international bodies and a workshop with the private sector.
The stocktake finds that financial authorities vary in terms of whether – and to what degree – they consider climate-related risks as part of their financial stability monitoring. Around three-quarters of survey respondents consider, or are planning to consider, climate-related risks as part of their financial stability monitoring. Most focus on the implications of changes in asset prices and credit quality. A minority of authorities also consider the implications for underwriting, legal, liability and operational risks.
Only a small number of authorities consider how climate-related risks to the financial system might (i) feedback to the real economy, thereby further affecting the financial system; or (ii) lead to spill-overs across borders or between financial sectors. Some financial authorities have quantified – or have work underway to quantify climate-related risks. Such work is hindered by a lack of consistent data on financial exposures to climate risks, and difficulties translating climate change outcomes into changes in those exposures.