The financial services industry has a crucial role to play in the transition to a lower carbon economy. Much has been done in the industry to increase the pace and scope of the response but there is much more to do.
Our new report argues financial firms must respond to three imperatives on climate change:
1. Act on the risks. The report looks in depth at the potential impact of a carbon tax, which we estimate could drive credit losses of up to $1TN, and explores other climate risk types. While much is uncertain, it is clear that these risks are material. And yet few firms are systematically factoring them into decision-making today
2. Seize the opportunity. We profile the market in sustainable finance and estimate a 100bn+ in new revenue potential, across investing, financing, data and advisory. Those able to move fast and work across boundaries to shape the evolving market are best placed to win
3. Steer top down. Investor, customer and regulator pressure on financial firms is increasing in many markets - to get ahead of this we argue that firms need to act proactively to steer capital and show progress in reducing the carbon intensity of the portfolio. More fundamentally, we argue, this is an opportunity for the industry to play a leading role in one of the defining issues of our time.