CH4: Central Bankers Contribution to Climate Change Mitigation: Task Force on Climate-related Financial Disclosure (TCFD)

PHYSICAL IMPACT
Extreme weather, Disasters, Business disruption, Asset destruction, Migration,

TRANSITION IMPACT
Regulations, Technology, Consumer preferences
Lower value for stranded assets, energy price increase due to dislocation,

FINANCIAL LOSSES: Market loss, credit loss, underwriting loss, operational risks, liquidity risks

CENTRAL BANK ROLE

• Set interest rate
• Aid government achieve economic objectives
• Maintain financial stability

Ensure financial market price reflect all relevant RISKS

CLIMATE CHANGE RISK VS CREDIT RISK

• Far reaching impact
• Irreversible
• Foreseeable nature
• Dependent on short-term actions

TASK-FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE (TCFD)

Climate Related Risk (CRR)

Recommended Disclosures
Guidance
Supplementary Guidance

Financial
Banks, Insurance, Asset Manager, Asset Owners

Non-financial
Energy, Transportation, Materials, Building, Food, Agricultural, Forest Products

Four THEMES: Governance, Strategy, Risk Management, Metrics and Targets

TRANSMISSION CHANNELS

Climate Risk to Financial Risks

MICRO: Affecting individual businesses and households
Property damage, stranded assets

MACRO: Aggregate Impacts on macroeconomy

The Finance Industry Transition to Sustainability: Climate Science, Societal Issues, Regulation & Accounting
Chapter 2: The Paris Agreement, 1.5 Degree Target versus Net Zero Target