Climate-related risks, including physical, transition and liability risks, may be transmitted across the financial system through various transmission channels and may be amplified by the financial system, including across borders and across sectors. A more consistent global approach to addressing climate-related risks will help to better assess and mitigate financial vulnerabilities and reduce the risk of harmful market fragmentation.
This report aims to assist supervisory and regulatory authorities in developing their approaches to monitor, manage and mitigate risks arising from climate change and to promote consistent approaches across sectors and jurisdictions. By focusing on cross-sectoral and system-wide aspects of climate-related financial risks, it complements the standard-setting bodies’ ongoing work on approaches to addressing climate-related financial risks for their respective sectors.
In addition, as climate change is likely to represent a systemic risk for the financial sector, potential macroprudential tools or approaches would complement microprudential instruments.
The Financial Stability Board (FSB) invites comments on this consultative report. Responses should be sent to [email protected] by 30 June 2022 with the title “Supervisory and Regulatory Approaches to Climate-related Risks”. Responses will be published on the FSB’s website unless respondents expressly request otherwise. For more information, see page iii of the report.