Climate change is one of the greatest global challenges facing our society, and financial firms as global capital providers play a key role in financing the creation and deployment of solutions that mitigate greenhouse gas emissions, promote green energy generation and strengthen community resilience. While individual institutions have a significant role to play in the global effort to address climate change, policy must provide a critical foundation.
On February 17, the US Climate Finance Working Group, which comprises ISDA and 10 other trade associations, published principles for a US transition to a sustainable low-carbon economy. The principles are intended to serve as a useful framework, offering perspectives from the full spectrum of the financial services industry including banks, investment banks, insurers, asset managers, investment funds, pension funds and other financial intermediaries.
The principles are:
Set science-based climate policy goals that align with the Paris Agreement
Increase and strengthen US international engagement
Provide clear long-term policy signals that foster innovation in financial services
Price carbon and leverage the power of markets
Minimize costs and support jobs in the transition
Foster international harmonization of taxonomies, data standards and metrics
Promote more robust climate disclosure and international standards
Ensure climate-related financial regulation is risk-based
Build capacity on climate risk modeling and scenario analysis
Strengthen post-disaster recovery, risk mitigation and adaptation
The full PDF of the principles, Financing a US Transition to a Sustainable Low-carbon Economy, is available below.