With a long — and growing — list of efforts underway to address climate-related risks in the financial sector, the Financial Stability Board (FSB) is calling for greater coordination to address the threat posed by global warming.
In a letter to G20 finance ministers and central bank governors ahead of their upcoming meeting from July 9–10, the global policy group stressed the need for more coordinated action on climate risks.
“In an environment with a proliferation of third-party frameworks for climate-related disclosures, global alignment of practices will help deliver consistent and comparable disclosures and foster convergence,” the FSB said.
To that end, the FSB released a proposed roadmap that details the work that’s already underway and areas that must be addressed by international standard-setters.
In particular, the FSB is calling for coordinated work on disclosure requirements, data needs, vulnerability analysis, and regulatory and supervisory tools.
The FSB said that its roadmap is intended to help identify gaps in the existing work, limit overlap and encourage synergies.
The roadmap also positions the FSB as a forum for examining systemic issues and determining pathways to addressing those issues in a coordinated way.
“All this supports the consistency of actions to be taken over the coming years, enhances authorities’ ability to address financial stability risks and reduces the risk of harmful market fragmentation,” the FSB said.
Alongside the roadmap, the FSB also issued a report on the availability of climate data and the gaps in the current data, along with a report on promoting climate-related disclosures.
Among other things, the report on data gaps called for the development of forward-looking metrics on climate-related risks at both the individual firm level and for the financial system as a whole.
In the disclosure report, the FSB recommended adopting a transparency framework based on the recommendations of the industry-led Task Force on Climate-Related Financial Disclosures.
Currently, a lack of consistency and reliability in climate-related disclosures remain stumbling blocks to producing adequate disclosure, the FSB noted.
The report also provides high-level guidance for regulators and policymakers in developing disclosure requirements.