Content by Topic: Climate Risks

Understanding climate risk implications for the financial sector; identifying proactive responses and new market opportunities

Climate change poses significant risks to the financial system and the economy. Disruptions from more frequent and severe extreme weather events as well as risks stemming from the transition to a low-carbon, net-zero economy will require work on several fronts: global policy action, technological innovation, more sustainable finance and large socio-economic changes.

Climate risks are challenging to assess with long time horizons and uncertainty as to future policy and socio-economic factors. They are global and economy-wide in nature and complex, varying from region to region and sector to sector. While efforts to decarbonize economies create opportunities for investment and green growth, they also carry transition risks.

GRI established a sustainable finance centre of excellence in 2019 with a considerable focus on climate risk, recognizing the critical global challenge to have widespread potential impact on economies, macro-economic security, and industries – including the financial sector. Since then, a wealth of research has been undertaken to elevate our understanding of the risks and identify relevant mitigation strategies.