Large Banks Establish Climate Risk Consortium
17 of the largest North American-based financial institutions joined together this month to establish the Risk Management Association’s (“RMA”) Climate Risk Consortium (“Consortium”) for “advancing awareness of and addressing risks relevant to climate change.”
The Consortium's initiatives are:
“Helping banks develop a climate risk strategy, including risk appetite, training, policies, and Board assessments.”
“Communicating in a common voice to regulators and assessing/preparing for regulatory disclosures.”
“Developing common metrics and targets for reporting and benchmarking; organizational design for scenario analysis and stress testing.”
The formation of the Consortium comes after the recent legislative and regulatory push in the United States to address the potential connections between the financial sector and the rise in climate risks. There is likely a great connection as Nancy Foster, president and chief executive of RMA said in an interview “it is important for banks to lead, as opposed to react.” Foster stated that banks could eventually be involved in determining asset exposure when climate events occur, as well as collecting data on their clients’ carbon emissions to assist in the expected regulatory scheme set to enforce stricter climate legislation.
Banks currently acting as members the Consortium are:
Bank of America
Fifth Third Bank
Huntington National Bank
KeyBank
M&T Bank Corp.
MUFG Union Bank
National Bank of Canada
Regions Bank
Royal Bank of Canada
Silicon Valley Bank
Trust
U.S. Bank
Wells Fargo
Although all of the Consortium’s members are exclusively large banks, the Consortium's website provides it is “working on including mid-tier financial institutions in this effort.” As such, financial institutions of all sizes should be aware of the Consortium and the efforts it is putting forward as the organization could soon be available for membership.
The RMA's efforts could be involved in the new, quickly developing legislative scheme.