Banks Heed Carney’s Call to Tackle Risks of Climate Change

Eleven major banks including Barclays Plc, Citigroup Inc. and UBS AG said they’ll seek ways to address the financial risks of global warming, after Bank of England Governor Mark Carney urged investors to act on the threat.

The group, representing more than $7 trillion, started a pilot project to implement the recommendations of a taskforce set up by Carney to increase financial reporting standards on issues related to the environment, according to a statement from the United Nations Environment Finance Initiative on Tuesday.

The group also includes Australia & New Zealand Banking Group Ltd., Banco Bradesco SA, National Australia Bank Ltd., Royal Bank of Canada, Banco Santander SA, Standard Chartered Plc, Unibanco Holding SA and TD Bank Financial Group, according to the statement.

The taskforce, which was led by Michael Bloomberg, founder and majority owner of Bloomberg News and its parent Bloomberg LP, said companies impacted by climate change should conduct scenario analysis and include results in their financial reports.

The final report was submitted to the Group of 20 Countries at their summit in Hamburg last week. Leaders noted the findings in a Climate and Energy Action Plan for Growth signed on Saturday by all countries except the U.S.

Read More: Trump Isolated Again as G-20 Sees U.S. Slowly Pulling Away

The taskforce warned that banks can be exposed to climate risk through their borrowers, particularly if they provide loans to fossil fuel producers or agricultural and food companies.

“Banks could also become subject to litigation related to their financing activities,” it said.

The banks will develop analytical tools and indicators to assess companies’s disclosure of climate risks as well as opportunities that will be made public to encourage other banks to adopt the scenarios and models developed, according to the statement.

“After the G-20, the issue now is about implementation: how can the finance industry put the framework into practice and deliver disclosure that is meaningful?” said Christian Thimann, head of strategy, sustainability and public affairs at the AXA Group and co-chairman of UNEP FI and the vice-chair of the climate disclosure task force.

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