UNEP FI’s Climate Risk and TCFD programme takes a leadership role in developing good practices to identify, measure, disclose, and manage climate risk in the financial sector. Working with over 100 banks, insurers and investors since 2017, the programme has created numerous tools, frameworks, and guides to accelerate the implementation of these good practices.
Initially helping its members implement the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD), the programme now also provides insights on legal risks, climate stress testing, climate scenarios, climate tools, and other related areas. Resources include guidance reports, landscape reports and case studies.
Access all the programme’s outputs
Programme overview
The Climate Risk and TCFD programme is an ongoing effort by UNEP FI and financial institutions to address critical questions related to the measurement and management of climate risks and opportunities. Through output creation, discussion forums, and capacity building activities, programme participants have the opportunity to collaborate with regulators, researchers, academics, and tool providers on cutting-edge topics such as:
Scenario analysis has become a vital tool for assessing climate risks with a number of modelers having developed various scenario pathways. Our scenario analysis workstream is designed to help financial institutions better understand and use climate scenarios. Our working group focuses on:
- Understanding the assumptions and features of climate scenarios and their underlying Integrated Assessment Models (IAMs)
- Identifying how financial institutions can best use scenarios for specific use cases
- Driving the development of short-term scenarios
To do so, the programme has created a platform for engagement between financial institutions, modellers and researchers.
Climate stress testing is another key priority of the Climate Risk and TCFD programme. Our work on climate stress testing revolves around developing best practice guidance and sophisticating methodologies for climate stress testing. The programme continues to engage with supervisory authorities on their climate stress tests, including lessons learned and member feedback.
Climate change presents a range of physical risks. Financial actors need data and approaches to help them identify and manage physical risks in order to support their own stability and that of their clients and communities. Our working group aims to:
- Expose members to open-source data and tools for physical risk assessments
- Consider the second order and compounding effects of climate risks
- Explore underappreciated factors such as adaptive capacity in potential financial impacts
The programme’s physical risk work helps members heighten their understanding of physical climate risks, gain experience with climate risk data and assessment tools and improve understanding of relevant physical risk and adaptation metrics.
- Participants will understand the latest landscape of climate risk tools for both physical and transition risks
- Participants will review the use cases, sectoral and geographical coverage of third-party tool providers
- Participants will compare various tools to understand their strengths and weaknesses to determine the tools best suited to their needs
- Participants will identify where key gaps and limitations exist in the current landscape of climate risk tools and how can they be addressed
- Understand the different acts, omissions and failures that give rise to different kinds of climate-linked litigation/enforcement actions, together with the drivers for such actions.
- Understand how to identify and assess climate-related legal risks in lending and investment portfolios, covering rapidly evolving developments around methodologies and metrics in this area.
- In relation to firms’ own climate-related legal & regulatory risks: understand the key risks that arise in the context of banking and capital markets product lines and how they can be managed effectively.
- In relation to firms’ own climate entity disclosures (including target setting): understand what the key legal and regulatory risks are and how to effectively manage these.
- How to study risks for underwriting
- How to assess clients under different climate scenarios
- How to incorporate climate risks into borrower ratings and pricing
Benefits of joining the programme
- Building capacity on climate risk-related topics
- Publishing a first climate risk disclosure or enhancing current reporting
- More fully incorporating climate risks and opportunities into firmwide operations
- Empowering the firm to take a leading role in addressing climate-related challenges
- Engaging with a diverse ecosystem of peer institutions, supervisory authorities, academics, tool vendors, modelers and organizations like the Network of Central Banks and Supervisors for Greening the Financial System on cutting-edge topics
FAQs
UNEP FI’s Climate Risk and TCFD programme closely aligns its work with the UNEP FI net-zero initiatives, Task Force on Nature-related Financial Disclosures and the Principles for Responsible Banking. We collaborate with other UNEP FI initiatives for various sessions and workstreams, ensuring that the programme complements the work of other initiatives.
Contact
Get in touch with us for more information about the programme.- David Carlin, Climate Risk and TCFD Programme Lead
- Maheed Arshad, Programme Specialist, Climate stress testing, scenario analysis and sectoral risks
- Lea Lorkowski, Programme Specialist, Climate risks tools and regional capacity building
- Hina Majid, Programme Specialist, Legal and regulatory risks
- Wenmin Li, Climate Risk Programme Associate
- Drew Johnson, Climate Risk Programme Associate