BankThink: Climate Risk Test Asks Banks to Look Too Far Down the Road

Originally published in American Banker’s BankThink

Bankers have shown this year they could handle a broadly destructive health pandemic that blindsided the world. But they’re also preparing for another headwind: climate change.

As key financial intermediaries, banks have an important role to play in managing a transition away from carbon, but there is one idea that does not appear ready for prime time: stress testing for climate change.

Fortunately, U.S. banks are fully engaged on assessing and disclosing climate risks. And perhaps more importantly seeking to develop markets to assist in a transition away from carbon-intensive business.