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The governor of the Bank of France said that a global agreement is about to be reached, which will require all listed companies to disclose their climate change risks in a standardized way.
François Villeroy de Galhau told the Financial Times that negotiations between the government and central bank officials on the new climate risk disclosure rules are progressing faster than expected, and that an international framework can be agreed at the UN COP26 climate conference in Glasgow, Scotland in November.
“Appropriate disclosure should become mandatory-I hope this is the first step,” Villeroy said. “Six months ago, no one expected that we would move forward as quickly as we did, and said that we might reach a positive conclusion on mandatory disclosure at COP26.”
For many years, French banks and insurance companies have been required to disclose their exposure to climate change, while the UK plan Starting in 2025, all its listed companies are required to make such disclosures, and the EU is reviewing its non-financial disclosure rules.
At the same time, US President Joe Biden issued an executive order in May instructing Secretary of the Treasury Janet Yellen to work with regulators to develop a plan to “reduce the risk of climate change to financial stability.”
John Kerry, Biden’s climate envoy, Recently said The United States may “join Europe” and require companies to disclose climate risks.In addition, Yi Gang, governor of the People’s Bank of China, recently expressed support for the EU’s so-called Green classification It is expected to express support for other disclosure measures later this week.
“We should make progress on these two legs, mandatory and standardized [disclosure] Rules,” said Villeroy, who will speak at the three-day opening ceremony on Wednesday. Green Swan Conference The financial risks of climate change. “We should start with mandatory, but standardization will be the next step.”
The list of speakers for events organized by the Bank for International Settlements, the Bank of France, the International Monetary Fund, and 90 central banks and the regulatory agencies that make up the green financial system network reflects the growing number of importance The problem. The event featured the first public appearances of China’s Yi Gang and Jay Powell at the Federal Reserve and Christina Lagarde at the European Central Bank. Andrew Bailey of the Bank of England and others will also give speeches.
The French central bank governor said that more and more non-financial companies are reporting their climate risks, but this is “not yet unified”. He added that pressure from investors will force them to disclose more information in a standardized way.
Global regulators established the Climate-Related Financial Disclosure Working Group (TCFD) in 2017, clarifying that annual emissions data and climate risk analysis will be included in the annual report. TFCD last year Say More than 1,500 organizations have expressed support for their standards, but many organizations have only adopted these standards section if so.
Villeroy described the efforts to address the risks of climate change as “the most dramatic change I have seen in my career.”
The Bank of France released this year result The country’s largest banks and insurance companies are conducting stress tests on climate risk for the first time, measuring their performance under different scenarios in the next 30 years.
Villeroy said that developing credible climate risk stress tests will be a “game changer” to ensure that the financial system is prepared for global warming. He added that transitional risks—such as energy and industrial companies that may be in trouble due to rising carbon taxes—may increase the cost of risks for French banks by a quarter to a third.
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Villeroy once again called on the European Central Bank. He is a member of the European Central Bank’s Management Committee. Decarburization By staying away from the most polluted countries, it bought and accepted large amounts of corporate bonds and loans as collateral. He refuted the claim that this potential move represents the central bank’s “mission contagion.”
“This is a top priority for us and is in line with our mission of financial stability and price stability,” he said. “If you are a financial institution, you don’t manage climate-related risks, if you are a regulator, you don’t pay attention to them [then] You missed your primary duty-the duty of financial stability. “
For the transcript of the extended interview, see Moral Money at noon on Wednesday, June 2nd, GMT
Additional reporting by Gillian Tett
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