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Significance
Although there is agreement on baseline scenarios, modelling presents a huge challenge due to the unprecedentedly lengthy timescales, and there is a risk of significant divergence by country.
Impacts
Banks and insurers will manage their exposures to polluting versus carbon-friendly sectors; this could hasten national energy transitions.
US policies will be key, given US President Joe Biden’s focus on international action to combat climate change.
As financial institutions become more aware of the climate implications of their decisions, they will adopt more sustainable strategies.
As confidence in climate change-related stress-testing improves, it will be incorporated into broader prudential capital requirements.
Keywords:
economy,
banking,
climate,
environment,
finance,
natural disasters,
regulation,
Banks,
Capital markets,
International,
INT
© Oxford Analytica 2021. All rights reserved. This content contains general information about geopolitical, macroeconomic and social developments or (where stated) other matters. It does not contain advice or recommendations that may be relied on. Where links to external websites are provided, this does not indicate that Oxford Analytica or Emerald agree with, endorse or have checked for accuracy the contents of said sites.
2021
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