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.

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The views expressed do not necessarily reflect those of the Bank Policy Institute’s member banks, and are not intended to be, and should not be construed as, legal advice of any kind.