Sustainable Finance and Climate Risk

Climate Risk and Sustainable Finance - Outlook for 2020

Alyson Slater, Senior Director, Sustainable Finance, Global Risk Institute

Recognition of the risks and opportunities associated with climate change reached new peaks across financial markets in 2019. But where to from here? From big picture global forces right down to expected milestones in the Canadian financial sector, here are five big trends that will shape the climate risk and sustainable finance space in 2020.

1. Climate change drives geopolitical risk

After a year of unprecedented public protests globally, governments fail to meet expectations at COP 25. The growing delta between citizen expectations and government action will drive increased tensions.


2. Investors tighten carbon finance

Many European financial institutions brought their businesses in line with a 2 Degree Celsius trajectory, in line with the Green Deal, and the world’s largest asset manager, BlackRock, kicked the year off with some big promises on climate.


3. The year "transition" will be defined

The market for green financial products is booming, but the need to attract capital toward innovation in carbon heavy industries is urgent. Canada will issue a Transition Taxonomy in 2020 and open up a new segment in the green debt market.


4. Task Force on Climate-related Financial Disclosures (TCFD) reporting and regulatory developments

Expect to see increased depth and breadth in TCFD disclosures as companies enter the third reporting cycle since the Financial Stability Board (FSB) issued this guidance. Central banks step up the work toward climate stress testing.


5. Mark Carney's new job and the path to COP 26 in Glasgow

The role for the financial sector in the global climate movement will become clear under new leadership, driving meaningful participation at the November 2020 international meeting.



Read the full document here: Climate Risk and Sustainable Finance Outlook for 2020