The head of the central bank says the company is forced to be aware of climate risks
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The governor of the French central bank said there is a global agreement available that should make the risks of climate change known in a standardized way.
François Villeroy de Galhau told the Financial Times that talks between government and central bank officials on new rules to raise awareness of climate risk have progressed faster than expected and that an international framework could be agreed at the UN’s COP26 climate conference in Glasgow, Scotland.
“Proper disclosure should be mandatory – I hope it’s a first step,” Villeroy said. “No one expected it to go as fast as we did six months ago and maybe we could have a positive effect on the mandatory disclosure of COP26.”
French banks and insurance companies have been exposed to climate change for several years in the UK planak make this disclosure mandatory for all listed companies from 2025 onwards and the EU revises the rules on non-financial disclosure.
Meanwhile, U.S. President Joe Biden issued an executive order in May urging Treasury Secretary Janet Yellen to work with regulators to “reduce the risks to financial stability” from climate change.
John Kerry, Climate Representative for Biden, he said recently The U.S. is likely to urge companies to “join Europe” in raising awareness of climate risk. Separately, Yi Gang, the governor of the People’s Bank of China, has recently come out in favor of what he called the EU green taxonomy and is expected to express support for other outreach measures later this week.
“We should make progress on these two legs, mandatory and standardized [disclosure] rules, ”said Villeroy, who will give a three-day opening speech on Wednesday Green Swan Conference on the financial risks of climate change. “We should necessarily start, but standardization would be the next step.”
The list of speakers at the event – organized by the Bank for International Settlements, the Banque de France, the IMF and the 90 central banks and supervisors that make up the Financial System Greening Network – is growing. importance of the grain. The event will feature the first public appearance by Chinese Yi, Jay Powell at the US Federal Reserve and Christine Lagard at the ECB. Andrew Bailey of the Bank of England and others will also make presentations.
The governor of the French central bank said more non-financial companies were reporting climate risks, but that “is not yet harmonized.” Investor pressure would force them to disclose more information in a standardized way, he added.
Global regulators launched the Climate-Related Financial Reporting Group (TCFD) in 2017, detailing annual emissions data to be included in annual reports and climate risk analysis. Last year TFCD he said More than 1,500 organizations expressed their support for its standards, but many accepted them partially if.
Villeroy said the impetus for tackling the dangers of climate change is “the most dramatic change I have seen in my professional career”.
This year it has been published by the French central bank results the premiere of a climate risk test at the country’s largest banks and insurers, measuring how they would act in different scenarios over the next 30 years.
Developing credible stress tests on climate risks would be a “change” to ensure the financial system is prepared for global warming, Villeroy said. He added that the risks of the transition – such as the possibility of energy and industrial companies stopping as a result of rising carbon taxes – could increase the cost of risk in French banks by a quarter to a third.
Villeroy reiterated his call for an ECB member of the governing council decarbonization buy and expand a broad portfolio of corporate bonds, away from the heaviest contaminants. The central bank claimed a potential move that represented a “mission move”.
“It is essential for us, in line with the mandate of financial stability and price stability,” he said. “As a financial institution, if you don’t manage climate-related risks and, as a supervisor, you don’t look at them [then] you lose your first duty – the duty of financial stability. ‘
To view the transcript of the extended interview, see Moral Money at noon GMT on Wednesday, June 2
With additional reports by Gillian Tett
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