Banks need to get ahead of climate change for sustainability goals

BANKS are where the financial system and the real economy meet. The UN's Sustainable Development Goals and the Paris climate change agreement will be unattainable unless banks finance solutions to these massive social and environmental challenges. Nor can we have efficient, fair and resilient financial and economic systems if banks fail to manage and reduce environment-related risks for themselves and their clients.

Few (if any) banks would have viewed climate change as "strategic" 10 years ago. As recently as last year, the Bank of England (BoE) found that, while 70 per cent of banks recognised that climate change poses financial risks, only 10 per cent took a long-term view of the risks. And 30 per cent of lenders still considered climate change only a corporate social responsibility issue, with little relevance to business strategy or operations.

Attitudes are shifting fast. For many lenders, climate change has become a topic of concern for risk management, client and investor relations, product development, government affairs and marketing teams, among others.