Environment
Managing climate risks and building capacity
The finance sector is exposed to new climate change-related investment and lending risks across the economy, including:
- Physical risk - the direct impacts of increasing weather volatility and changing climatic conditions
- Regulatory risk - the impact of government regulation at the global, regional, national or local level
- Market and reputational risk - shifting consumer expectations and the ability of business to respond.
All of these risks can impact investment value or future earnings. We need to understand these risks within our customer and investment base, model the specific effects on key sectors such as agriculture and tourism, and be prepared both for shifting industry dynamics - which affect the market value of assets - and unpredictable impacts on global markets.
On the other hand there are opportunities - which include the financing of clean technologies and new infrastructure, renewable energy and green consumer products, and the emergence of emissions trading.
What we’re doing
- Working with customers to develop and deliver practical solutions to assist in managing the transition to a low carbon operating environment
- Implementing an Environmental, Social and Governance (ESG) risk framework, incorporating climate change considerations
- Embedding potential exposure to climate and environmental change within sectoral, country and company analysis
- Managing carbon exposure and risk within lending and investment activities
- Providing ongoing climate change and carbon risk training to key people across the Group, including the Board and Executive Team.
