Milestone In EBRD Work On Climate-related Financial Risk


By Vanora Bennett

The European Bank for Reconstruction and Development (EBRD) has published its first stand-alone report on the steps it is taking to follow the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The publication of the report is an important milestone for the EBRD’s process of aligning its metrics and disclosure relating to climate risks and opportunities to those of other organisations, while formulating plans to become a majority green bank by 2025.

The EBRD report follows the TCFD recommendations on disclosure in four key areas: governance, strategy, risk management, and metrics and targets. It describes the Bank’s current procedures, state of preparedness and future plans to fully comply with the TCFD recommendations.

The report also spells out the Bank’s ambitions going forward. The EBRD signed up as a supporter to TCFD in March 2018 and is now at the initial stage of TCFD disclosure. The Bank is currently carrying out a pilot to examine the impact and changes needed to fully implement TCFD’s growing disclosure requirements.

The EBRD’s Vice President for Risk and Compliance, and Chief Risk Officer, Annemarie Straathof said: “The global challenges facing the world today mean that we at the EBRD will increase our climate-related activities. We have a clear mandate and a strong balance sheet to do this. While we will not hesitate to take the necessary investment risks, we need to do this in an informed way. The TCFD’s recommendations provide a roadmap for this journey and we are committed to following it.”

The report also provides insights to how the EBRD is beginning to assist its clients to implement the TCFD recommendations. This will help the Bank better understand its own exposure to climate financial risks and disseminate good practices on climate risk management among the EBRD’s clients and across the regions in which it operates.

The TCFD was established in 2015 by the Financial Stability Board, an international body under the auspices of the G20 and dedicated to promoting global financial stability. It aims to develop guidelines for voluntary climate-centred financial disclosures across industries. The TCFD’s recommendations, first formulated in 2017, assist businesses in identifying and sharing both risks and opportunities they face as a result of climate change.

This effort at unifying disclosures in a relatively new area of financial risk will make market participants of all kinds better prepared to evaluate and manage risks and opportunities. More than 1,500 TCFD supporters worldwide have now signed up worldwide, part of growing efforts to harmonise approaches to climate action.

The EBRD’s TFCD report comes out within days of the Bank’s Board of Governors approving the bank’s green direction for the next five years at its Annual Meeting on 7-8 October. The new EBRD Green Economy Transition (GET) approach 2021-25 aims to make a majority of the EBRD’s investments green by 2025.

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