High-Level Plenary: Physical climate risks and the financial system: A spotlight on materiality
Oct 13, 2021 | 12:15 PM - 1:15 PM
Oct 13, 2021 | 12:15 PM - 1:15 PM
Description
As climate change impacts manifest, economies and communities increasingly feel the burden of physical climate risks, such as floods, droughts, water stress, declining water quality, among others. Investments to manage these physical risks can deliver very high socio-economic benefits; yet, a significant investment gap persists, resulting in increased negative impacts and costs for societies and economies year after year.
This session will focus on how physical climate risks are taken into account (or not) in various parts of the financial system, using water-related risks (“too much, “too little” or “too polluted”) to provide tangible illustrations. In particular, it will focus on a possible “materiality gap” between the cost to economies and society of physical climate risks (environmental materiality) and their potential impact on the financial system (financial materiality). It will consider how evolving financial regulation, such as disclosures and prudential frameworks, could foster more investment in water security through increased visibility of both risks and opportunities.
Background paper
Watered down? Investigating the financial materiality of water-related risks in the financial system
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