Report Reveals UK Financial Firms Not Prepared Enough To Tackle Climate Change Risks
30 Jan 2020
Approx Reading time: 3 minutes
- A survey conducted by Odgers Berndtson has revealed that most financial firms don’t have a solid plan in place to tackle various risks coming from climate change.
- Climate change risks include a change in the valuation of global assets and a shift in investments, especially in fossil fuels and other carbon-emitting ventures.
A new report has revealed that only around 20% of all financial service providers operating in the UK have a comprehensive strategy to tackle the risks posed by climate change. According to details provided in the report released by Odgers Berndtson
, a global firm providing executive search services, 50% of all managers working for banking institutions, insurance providers, and as asset managers have stated that they are investing in the development of a coordinated approach towards managing and achieving emission targets. The Executive Director of the climate risk division at the Bank of England
, Sarah Breeden, presented the data on behalf of Odgers at their event. According to her, although many of the steps that have already been taken by managers at financial institutions were promising, still more effort needs to be made considering the serious risks posed by the climate crises. Breeden agreed that it is certainly challenging for managers to look a decade or two into the future to estimate the impact of climate change and devise appropriate strategies to overcome the posed risks, however, she also stressed that having such strategies in place is very important. According to Breeden, the value held by all assets in existence across the planet would change over time due to climate risks, including those pertaining to infrastructure, transport, and agriculture, to name a few. Experts at numerous central banks have raised concerns that current strategies to tackle climate change risks focus on short-term physical risks, such as flooding or wildfires while ignoring long-term climate issues such as the need for businesses to transition and eventually eliminate all carbon emission across all operations. The survey conducted by Odgers included around 700 respondents, all of whom represented senior executives working at financial service companies. The questions in the survey inquired about their company’s strategies to tackle important challenges, including the challenge of eventually transitioning into a zero-carbon business environment. Apart from the 21% that responded confidently about their company’s preparedness to tackle physical as well as transitioning risks arising from climate change, 16% said the focus was given only to physical risks, while 22% said strategies focused entirely on climate risks. 48% of all respondents said their company was focusing more on developing a coordinated approach to tackling all risks moving forward. Mark Carney, who is the Bank of England’s Outgoing Governor, financial firms can still do more to prepare for the climate crises. Carney has recommended that firms take active action in collaboration with the United Nations to tackle all risks presented by climate change. Reportedly, climate activists/campaigners are expected to call for a drastic change in the policy of financial firms to invest in fossil fuels at their annual meetings for shareholders that are scheduled this year.