Better Markets has filed a Comment Letter with the Basel Committee on Banking Supervision in response to their proposed principles for the effective management and supervision of climate-related financial risks.

Why It Matters. The Basel Committee on Banking Supervision (BCBS) is the primary global standard-setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters. It is a pivotal standard-setter in the banking sector, mandated to strengthen the regulation, supervision, and practices of banks worldwide. In proposing principles for management and supervision of climate risks to financial systems, the Committee is incorporating best practices from its international constituency as an important example of addressing climate risk.

What We Said. Considering the broad range of risks that climate change can pose, we welcome the Committee’s approach of largely integrating climate risks into existing risk management principles with some additions that capture unique aspects of climate risks—in particular, the use of scenario analysis to identify and size risks, the consideration of longer time horizons, and the recognition that climate risks and their management are an evolving process.

Bottom Line. Better Markets is fully supportive of the significant and positive step the Committee is taking to incorporate climate risks into supervisory examinations and final assessments. We urge the Committee to incorporate the enhancements we propose in our Comment Letter and finalize these principles as soon as possible.

Read our full Comment Letter here or click the button below. Read the Press Release here.