Although widely recognised as having a fundamental role to play in delivering the Paris Agreement, the financial sector has often been a cause, rather than a solution, to some of the pressing challenges faced by our planet and its people.

The sector sits at the heart of today’s global markets and therefore has a critical role to play in supporting the decarbonisation of the global economy. It must also adapt to changing global consumption and productions patterns that consider environmental impact.

According to UNEP FI (see article) financial opportunities associated with overhauling economies towards climate-compatibility include:

• New risks need to be understood, identified, assessed, managed, and eventually disclosed on, by institutions across financial industries.
• The transition to low-carbon and climate-resilient economies requires additional investment at an order of magnitude of at least USD 60 trillion, from now until 2050.

For financial institutions to become determined enablers and catalysts of the climate economic transition, they need to understand the commercial risks and opportunities implied, and know how to act on them.

Climate change is a large, systemic financial risk that will change asset values as investment moves away from high carbon assets towards a low carbon economy.