Opinion Column, Denis Beau - France’s new step for the supervision of climate-related financial risk
Monday 24 May 2021 ACPR Visit source website Download PDFDenis Beau of the Banque de France explains the results of its pilot exercise, and what comes next
The pilot exercise on climate risk conducted by France’s Autorité
de Contrôle Prudentiel et de Résolution (ACPR) is unprecedented. It
is the first time that a supervisor has organised for the banking
and insurance groups under its responsibility such a comprehensive
and challenging exercise to assess their exposure and contemplated
response to the transition and physical risks related to climate
change.
Those physical and transition risks may have different but
cumulative impacts. The ACPR, with the help of Banque de France
staff, prepared this exercise in line with the guidelines created
by the Network for Greening the Financial System (NGFS), and
assessed two of the scenarios published by the NGFS in June
2020.
The innovative and ambitious nature of the pilot exercise lies in
the specific features embedded. These include the 30-year time
horizon over which financial risks related to climate change need
to be assessed, the global geographical dimension, and the
incorporation of policy and technological changes.
The global dimension is crucial for internationally active
institutions like French banking and insurance groups...