Strengthening Climate Risk Metrics – A Roadmap for 2021

An online roundtable to look at currently available climate risk metrics and chart a way forward to close gaps in methodologies and data.

  • Climate risks are financial risks. As such they must be incorporated into all investment decisions, including those by banks, investors and asset managers. They must also become an integral part of central banks’ monetary policy operations, as well as of financial supervision – both on a micro- and on a macroprudential level.

    Appropriate risk metrics stand at the core of that. In the last years, methodologies and data to estimate climate risks have grown rapidly. Today, market participants, central banks and financial supervisors can tap into a broad array of analytics on both the physical risks from climate change as well as the risks from the transition to a low-carbon economy.

    An increasing number of actors have already made climate risk assessments an integral part of their decision-making. However, a wider-spread adoption is crucial to reflect climate risk metrics in financial markets across the board. Understanding the barriers for their integration that market participants as well as central banks and financial regulators face and the potential drivers to overcome them is key.

    To that end, CEP organized a roundtable under Chatham House rule to convene providers and users of climate risk analytics in financial institutions, central banks and supervisory authorities, to assess the status quo on current available risk metrics, identify gaps in methodologies and data, and develop a common agenda to close them.

  • Tuesday, 23 February, 2021
    14.30Welcome and Introduction
    14.45Data and Methodology: Where do we Stand?
    Which climate risk metrics are available? What climate risks, sectors and market segments do they cover? Do climate risk metrics converge and to what degree should they?
    15.40Climate Risk Metrics: What is Needed?
    To what extent are climate risk metrics integrated in market participants’ investment decisions, as well as in central bank operations and financial supervision? What climate risk metrics are currently not available but needed? Which data do they require?
    16.35Strengthening Climate Risk Metrics: A Joint Agenda for 2021
    If things go well, how will the market for climate risk metrics develop in 2021? What are pathways and critical steps to increase the integration of climate risk metrics in investment and policy decisions? Which synergies between private and public actors can we identify? What is the role, if any, of policy and regulation?
    What questions did we not ask that we should raise?