Acin has published a barometer charting the preparedness of the world’s leading banks and asset managers to meet upcoming challenges in managing climate-related risks.
With regulatory clocks ticking for these organizations to embed climate risk into their financial risk management frameworks by January 2022, the vast majority of firms have acknowledged the need to act on climate risk and have made some progress.
However, independent research commissioned by Acin, produced from an analysis of the Annual Reports and (where available) Sustainability and Climate Reports of 63 large banks and asset management firms*, reveals that much remains to be done in terms of practical implementation.
- Most firms have good intentions. The financial institutions analyzed display a clear and collective acknowledgment of the need to meet and address the risks posed by climate change. 70% of banks and asset managers reference alignment with the Task Force for Climate-related Financial Disclosures (TCFD) and its principles.
- Significant progress has been made. Many firms are capturing, publishing, and acting on climate-related data today, as well as preparing for the future impact of risks. 60% of firms already conduct some form of planning to prepare for the impacts of chronic climate risk. Many are undertaking scenario analysis and specific risk assessment exercises for areas most likely to be affected by climate risks. 40% reference a dedicated individual, team, or taskforce to focus on climate change-related risk in their latest reports.
- However, there is still a long way to go. Only 37% of firms have a mature approach to climate risk management and only 19% publish detailed data on climate risk. Although they are preparing for the impact of climate-related risks, either these firms are unable to measure progress adequately or they are unwilling to make numbers publicly known. This is also reflected in the extent to which climate risk is embedded in risk management processes. While most firms make some reference to embedding climate risk within their risk management process, the research found that implementation progress is very varied.
The full research report also analyzes approaches that firms are adopting in incorporating climate risk into risk management frameworks.
Paul Ford, CEO at Acin, said: “It is encouraging to see evidence of banks and asset managers responding to climate change. That said, the research clearly indicates some tough work ahead. Commitments are an essential first step, but we know from experience that embedding risks and controls in an organization is challenging. Climate risk is an emerging discipline where roles and responsibilities may not yet be fully defined, and the nature of the risks transcend financial and non-financial. Staying on top of what is clearly emerging regulation is not easy either. UK and European regulators expect to see climate risk embedded in 2022, if firms are to avoid capital adequacy implications. Acin’s peer network and platform, along with our initial inventory of climate risks and controls driven by the latest regulatory guidance, are helping firms meet these challenges.”
Notes to Editors
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Acin is the leading risk and control data standards, benchmarking and controls data analytics company. Acin enables firms to standardise non-financial risks and controls, improve efficiency and reduce the cost of their risk and control operating model.
We are a SaaS-based, Enterprise platform transforming the way financial services firms manage non-financial risk through a technology, data standards and content-driven platform that connects financial services firms together to better measure, manage and mitigate non-financial risk. We are resolving the root cause of the problem rather than just treating the symptoms.
Acin’s solution has received widespread industry recognition, including multiple awards wins such as the IIRSM Risk Excellence Award 2020, and has been named as one of the most innovative RegTech companies in 2019 and 2020.