Basel Committee’s Revised Core Principles Push Regulators to Mitigate Climate-Related Financial Risks
WASHINGTON, D.C. – The Basel Committee on Banking Supervision, the global body charged with harmonizing banking regulation across international borders, last week adopted important revisions to the Core Principles for Effective Banking Supervision, last updated in 2012. The committee calls on bank supervisors to consider threats posed by climate-related financial risks and instructs regulatory institutions to take a “forward-looking approach” to supervision and apply the principles to non-bank financial institutions in appropriate circumstances. Elyse Schupak, climate and financial regulation policy advocate with Public Citizen’s Climate Program, issued the following statement:
“Disorderly or delayed transition away from high emitting industries threatens to leave banks exposed to significant risk. Inclusion of climate-related financial risks in the Core Principles reflects the very real impacts climate change will have on our financial system and the global economy. Supervisors will now have to update the tools and approaches used to assess and mitigate climate risk in the financial system.
“It is imperative that U.S. financial regulators respond to the revised principles by addressing gaps in information on climate-related financial risk and require banks to produce net zero transition plans to manage risks at the level of individual institutions as well as in the banking system as a whole. Implementing a ‘forward-looking approach’ to supervision should be a priority for U.S. regulators that have been far too slow in their response to stemming the financial risks related to climate change.”
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