Global regulators set climate checklist for banks

LONDON, June 15 (Reuters) – Global regulators on Wednesday released a detailed checklist for banks to assess how climate change is affecting all aspects of their business, including pay and capital, as economies set carbon reduction targets.

International banks like Goldman Sachs, Deutsche Bank and HSBC will need to consider whether they are properly quantifying climate change risks despite sometimes patchy data and time horizons that go well beyond traditional risk and reward assessments.

The guidance is the latest effort by the Basel Committee, made up of regulators from the United States, Europe, Japan, China and elsewhere, to review how their regulation covers climate change in a forward-thinking industry. keeps efforts to transition to a net-zero economy.

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Banks should consider how climate change risks affect their business strategy, training for senior management and board members, internal controls, capital, and short-, medium-, and long-term compensation, as directed .

“The board and senior management should consider whether integrating material climate-related financial risks into the bank’s overall business strategy and risk management frameworks may warrant changes to its compensation policies,” Basel said.

“Banks should identify, monitor and manage all climate-related financial risks that could materially affect their financial position, including their capital resources and liquidity positions.”

Committee members, which include regulators from the United States, Europe, China and Japan, are expected to implement the new guidelines as soon as possible, and Basel will monitor compliance.

Regulators say few if any banks have conducted such detailed and comprehensive climate risk assessments.

Separately, banks in the United States, European Union and elsewhere are required to disclose to investors how climate change affects their business.

(This story reposts to reinstate the dropped reference to the Basel Committee in paragraph 3)

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Reporting by Huw Jones, editing by William Maclean

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