10 February 2021  |  Climate Risk and Sustainable Finance

Climate change poses foreseeable physical and transition risks, but uncertainty remains in the magnitude of impact, timing, and policy pathways that will actually come to pass.

18 January 2021  |  Climate Risk and Sustainable Finance

As we emerge from a year of unparalleled disruption, we look ahead to a 2021 that will continue to be shaped by the global pandemic, pressing human health issues, and the ensuing economic fallout. Many points of connection and comparison have been drawn between the pandemic and another external risk of global proportions – climate change. From big picture global forces right down to expected milestones in the Canadian financial sector, here are the trends that will shape the sustainable finance and climate risk agenda in 2021.

9 December 2020  |  Climate Risk and Sustainable Finance

This report that presents results of a global institutional investor survey focused on understanding the methods to assess physical climate risk, the extent of formal training on physical climate risk received by the Boards of Directors, C-Suite officers and portfolio managers, and the utility of Climate Risk Matrices to aid portfolio managers in investment decisions.

19 November 2020  |  Climate Risk and Sustainable Finance

The paper discusses the need for a “green” as well as a “transition” taxonomy that will help transform Canada’s economy into a low carbon economy with net-zero GHG emissions by 2050.

18 November 2020  |  Climate Risk and Sustainable Finance

This study examines trends in climate-related financial disclosure among 58 financial firms in Canada including banks, pensions, insurance, financial Crowns, and credit unions over three reporting cycles (2017, 2018, 2019). This study assesses progress toward alignment with the TCFD Recommendations, and by extension, provides some insight as to the state of climate risk governance and management among Canadian financial firms.

16 June 2020  |  Climate Risk and Sustainable Finance

GRI’s research partnership with the Columbia Water Centre has explored how the aging of dams, and the factors of climate change increase the risk of dam failures. The research has highlighted the many impacts that a dam failure can have on assets, highlighting the importance for the financial sector to assess their lending, insurance or investment portfolios for climate risk.

29 May 2020  |  Climate Risk and Sustainable Finance

The European Union Sustainable Finance Taxonomy has arrived! What is it, and why should Canada care? One of the missing critical catalysts for kick-starting the sustainable finance industry has always been a comprehensive, science-based classification system creating a common language for sustainable investments. On March 9, 2020, the EU Sustainable Finance Taxonomy was released. It fills that critical void and is a genuine game-changer.

10 March 2020  |  Climate Risk and Sustainable Finance

The report “Factoring Climate Risk into Financial Valuation” shows how climate-related data can be used with existing valuation models to determine a company’s climate change risk exposure in financial terms. GRI has supported the development of this tool to help investors incorporate extreme weather risk into their decision-making. This framework will fill in data gaps that are crucial for effectively assessing risk.

5 March 2020  |  Climate Risk and Sustainable Finance

Climate change is a broad and diverse trend that poses a significant challenge for Financial Institutions (FIs) to address. This paper deploys one approach to weighing and prioritizing these risks, The Global Risks and Trends Framework (GRAFT), to examples of climate change, extreme weather events and natural disaster risk correlations and suggests ways for FIs to address them.

17 January 2020  |  Climate Risk and Sustainable Finance

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

18 December 2019  |  Climate Risk and Sustainable Finance

Debrief for Canadian Financial Institutions on COP25 Outcomes Alyson Slater and Sara AghakazemJourabbaf, Global Risk Institute Global leaders concluded their annual negotiations on climate change over the past weekend, where carbon markets and more ambitious national emission reduction plans were key agenda issues. The Global Risk Institute in Financial Services has put together a quick… View Article

13 November 2019  |  Climate Risk and Sustainable Finance

In our latest publication, we review the current practices that financial institutions are employing, globally, to comply with the recommendations developed by the Task Force on Climate-related Financial Disclosure (TCFD). We call for continued actions by the financial sector, governments, and standard-setting organizations and highlight six key areas of improvement to accelerate climate action and reporting.

13 November 2019  |  Climate Risk and Sustainable Finance

We develop a top-down strategic pathway towards green investing and show that eco-investing should not be a puzzle or a sacrifice if investors consider the unknown impact of climate change on different asset classes.

13 November 2019  |  Climate Risk and Sustainable Finance

Robert Engle, statistician, winner of the 2003 Nobel Memorial Prize in Economic Sciences, and his team of researchers, undertook a project, in collaboration with GRI, to use the tools of modern finance and risk management to measure and model environmental risk. They have contributed significantly to the bourgeoning literature that studies how climate change affects asset markets and, in turn, how asset markets may affect the dynamics of climate change.

13 November 2019  |  Climate Risk and Sustainable Finance

Assessing the hazard and exposure of dams in the U.S. This report provides visibility as to the types of risks that could emerge and is an important read for investors, asset managers and insurance providers analyzing portfolio level risk.

21 August 2019  |  Climate Risk and Sustainable Finance

The overall goal of this study is to develop a framework for rapidly assessing the hazard (i.e. the probability and magnitude of a dam failure) and the exposure (what gets affected by a failure), scalable over many regions for a preliminary ranking of the priority areas of concern. The intended application is for a portfolio level risk analysis by investors, asset managers, and insurance providers.

5 June 2019  |  Climate Risk and Sustainable Finance

The Society of Actuaries (SOA) Climate and Environmental Sustainability Research Committee awarded Sally Shen, Research Associate, Global Risk Institute, first prize for her three page essay “What Makes Green Investment a Puzzle” in May 2019. This essay argues that the myth behind the motivation of green investment is driven by both unknown knowns and unknown unknowns.

15 May 2019  |  Climate Risk and Sustainable Finance

Nearly a third of the dams fail due to overtopping, an event whose likelihood increases as the potential for severe storms increases. Aging dams and levees, in combination with an increasing frequency of climate extremes pose an unprecedented risk to communities around the world. The financial risk associated with the failure of such assets is unmapped.

15 April 2019  |  Climate Risk and Sustainable Finance

The climate is changing, but there is substantial uncertainty around the exact climate trajectory and as well as the economic consequences of climate change. As a result, investors around the world have a huge demand for hedging themselves against the realizations of climate risk.

15 October 2018  |  Climate Risk and Sustainable Finance

In view of the recent turmoil caused by international trade negotiations, we can view climate change policy in a game theoretic setting. In other words, although the major players may benefit from global emission reduction, there is a natural tendency to engage in climate policy as a strategic game. In this report, we study three different climate change games and compare with the outcome of choices by a Social Planner.

15 October 2018  |  Climate Risk and Sustainable Finance

Climate change caused by human activity represents a particularly intractable tragedy of the commons, which can only be addressed by cooperative actions of individual decision makers at both national and regional levels.

25 September 2018  |  Climate Risk and Sustainable Finance

Many of the costs associated with climate change, such as large-scale coastal flooding and long droughts, are predicted to occur decades or even centuries into the future. However, societies have to invest today in order to effectively mitigate and reduce these long-run risks.

15 February 2018  |  Climate Risk and Sustainable Finance

This research seeks to gain a better understanding of the impact strategic interaction and uncertainty have on our ability to make meaningful global reductions in greenhouse gas emissions.

2 October 2017  |  Climate Risk and Sustainable Finance

Confronting Deep and Persistent Climate Uncertainty Authors: Gernot Wagner and Richard J. Zeckhauser Abstract Deep-seated, persistent uncertainty is a pernicious feature of climate change. One key parameter, equilibrium climate sensitivity, has eluded almost all attempts to pin down more precisely than a ‘likely’ range that has stalled at 1.5–4.5°C for over thirty-five years. The marginal… View Article

2 August 2017  |  Climate Risk and Sustainable Finance

Throughout his campaign for the U.S. presidency, Donald Trump expressed skepticism about climate change and promised to repeal Obama-era climate policies. On June 1, 2017, President Trump made good on one of his biggest climate-policy promises by announcing that the United States would withdraw from the Paris Agreement. This paper discusses the impacts of this decision.

5 May 2017  |  Climate Risk and Sustainable Finance

Increasingly, governments around the globe are implementing more stringent climate policies to help stimulate the transition to lower-carbon economies. This transition brings with it both risks and opportunities for the financial sector. In this study, we compare the carbon intensity and performance of ‘green’ equities portfolios (environmentally conscious indices) and traditional market portfolios (market indices).

14 November 2016  |  Climate Risk and Sustainable Finance

Climate change is widely recognized as a serious risk that requires worldwide governmental action. Failing to act on climate change including the risk to the world’s financial systems by threatening financial resilience and longer-term prosperity.

12 July 2016  |  Climate Risk and Sustainable Finance

Climate change is one of the most significant environmental, economic and social challenges of our time. Download a copy of this report to learn more about this relatively new risk category whose impact on organizations will continue to grow.