By Reuters Jun 25, 2021 12:15:50 PM IST (Updated)
Financial institutions are required to assess what type of risks their borrowers or insurance holders face, and take that into account in measuring their exposure to climate risks.
Japanese financial institutions are struggling to put a price tag on the cost of climate change, an effort made difficult by the long timeframe and a lack of data for making credible predictions. Non-life insurer MS&AD, for one, foresees the potential rise in claim payments in 2050 to be anywhere between 5% to 50% compared to current levels.
Below are the issues at stake for financial institutions, and where Japan stands on the global debate on assessing financial risks associated with climate change.
WHAT’S AT STAKE FOR FINANCIAL INSTITUTIONS?
Financial institutions are under increasing pressure from investors and regulators to disclose how much their balance sheets are exposed to climate-related risks.