Assessment and reporting of environment and climate-related risks and impacts on financial markets: A Nordic pre-study

Kenneth Möllersten, Lovisa Källmark, Jesper Lindgaard Christensen (Contributor), Pekka Tuominen (Contributor), Rita Lavikka (Contributor)

Research output: Book/ReportReport

Abstract

The financial sector is an important part of the transition to a more sustainable society. It is important to improve the understanding of how the development towards more financing of environmental and climate-friendly technologies can be supported and how can transparency and comparability be achieved. This study maps methods and frameworks used by players in the financial markets in the Nordic countries for reporting environmental- and climate-related information and evaluating environmental and climate impacts as well as financial risks. Furthermore, the study aims to address to what extent actors on the financial market take the 1.5 °C target into consideration in their strategies and decision making, identify best practice and propose recommendations, including opportunities for standardization, on methods for evaluating and reporting of environmental and climate impacts and financial risks. The study is based on literature review and interviews with key stakeholders in all Nordic countries.

There is a need to further improve the transparency and comparability of information and the possibilities for investors to make informed decisions. There are many standards and frameworks for integrating sustainability information into firms’ reporting and the resulting diversity leads to fragmentation and a lack of transparency and aggregability. Recent initiatives to consolidate standards and frameworks promises advancements in terms of alignment and improving access to, quality and comparability of data. The study proposes initiatives that could further improve transparency and comparability among actors in the Nordic countries. Furthermore, initiatives to enhance the capacity to effectively take the 1.5 °C target into account in investment decisions are proposed. This includes transparency requirements and methodological development in support of scenario-based analysis for assessing financial risks and the determination of whether investments are compatible with the Paris Agreement objective of “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climateresilient development.”
Original languageEnglish
PublisherNordic Council of Ministers
Number of pages47
ISBN (Electronic)978-92-893-6570-3, 978-92-893-6569-7
DOIs
Publication statusPublished - 2020
MoE publication typeD4 Published development or research report or study

Publication series

SeriesTemaNord
Number2020:50
ISSN0908-6692

Keywords

  • Environment and climate-related risks
  • Financial markets
  • Assessment

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