From June 2 to June 4, leading central bankers, policymakers, regulators, private sector CEOs, civil society members and academics gathered for the Green Swan 2021 Global Virtual Conference.

The conference was co-hosted by the Bank for International Settlements (BIS), the Bank of France, the International Monetary Fund (IMF) and the Network for Greening the Financial System (NGFS). It featured a host of leaders across the international finance arena, including:

  • Mark Carney, UN Special Envoy on Climate Action and Finance;
  • Jerome Powell, Chair of the Federal Reserve;
  • Agustín Carstens, General Manager of the BIS;
  • Andrew Bailey, Governor of the Bank of England;
  • Kristalina Georgieva, Managing Director of the IMF;
  • Christine Lagarde, President of the European Central Bank; and
  • Yi Gang, Governor of the People's Bank of China.

Climate Change as a Financial Challenge

  Unlike the premise that the 2008 financial crisis was a "black swan"-a rare and unexpected event-the core premise of the conference is that climate change is a "green swan" that will cause increasing and systemic shocks to the global financial system, with impacts across financial stability, employment, inflation, interest rates and global order. Federal Reserve Chair Powell noted that "[t]here is no doubt that climate change poses profound challenges for the global economy and certainly the financial system" that will require "bold steps and decades of sustained efforts."

Potential Solutions and Regulatory Measures

  The participants outlined issues for the financial sector to consider, including immediate steps that central banks, regulators, supervisors, financial and insurance firms, and other private companies should take to promote financial stability and to reduce climate change-related risks.

For example, the participants noted that central banks are uniquely situated to provide regulatory frameworks and technical support to the institutions they supervise. Therefore, and in advance of the United Nations Climate Change Conference (COP26) scheduled for November, financial institutions (including insurance companies) and other private entities should expect to see increased regulatory engagement on:

  • climate risk disclosures;
  • sustainable investment practices;
  • carbon pricing;
  • climate-related risk management; and
  • scenario planning.

When asked to identify their number one priority to combat climate-related risk, many in attendance identified corporate disclosures as foundational. According to some attendees, this tool would help policymakers analyze data, ensure that markets can better price climate risk and enable the private sector to allocate capital accordingly. Some attendees referenced a recent study1 finding that only 25 percent of major financial institutions voluntarily reported on the emissions that they financed and that much of the data actually reported was inconsistent, unreliable and difficult to aggregate across industries.

Following the Green Swan conference, G7 central bank governors and finance ministers endorsed a move toward mandatory disclosures at a summit in London. According to the communique,2 the ministers and central bankers committed to "properly embed[ding] climate change and biodiversity loss considerations into economic and financial decision-making, including addressing the macroeconomic impacts and the optimal use of the range of policy levers to price carbon." This includes moving towards "mandatory climate-related financial disclosures" and also emphasized "the need for a baseline global reporting standard for sustainability" that can be supplemented by individual jurisdictions.  The G7 members specifically endorsed, among other options, the framework developed by the Task Force on Climate-related Financial Disclosures ("TCFD") and the work being done by the International Financial Reporting Standards Foundation.

Various jurisdictions are also enacting their own measures to combat this risk. Christine Lagarde, President of the ECB, said they are planning to release new forecast models and new transparency requirements. Andrew Bailey, Governor of the Bank of England, stated that the Bank of England is working to expand its scenario planning and set out updated supervisory expectations for banks and insurance companies to manage the risk of climate change and imbed this into its work by the end of 2021. And, echoing President Biden's May 20, 2021, Executive Order on Client-Related Financial Risk,3 Federal Reserve Chair Powell said that the US central bank is "quite actively" exploring how to measure and incorporate climate-related risk into its supervisory processes. Powell referenced scenario planning favorably and was careful to contrast it with stress testing.

In addition to proposed legislation and the launching of various frameworks, financial institutions and insurance companies should also expect to see increased resources to train and build out capacity for this work. For example, the BIS is launching a climate training alliance with the NGFS to ensure that policymakers and the private sector have the technical training to enact the various proposed frameworks. The BIS plans to focus training on enhancing market transparency, bolstering risk management and deterring greenwashing by developing taxonomies for a climate transition in alignment with the Paris Agreement.

WilmerHale is advising financial institutions on meeting the many challenges associated with managing climate-related risks and ESG risks more generally. We are available to work with clients to prepare for the greater regulatory engagement that is likely at hand. 


1. The Time to Green Finance, CDP Financial Services Disclosure Report 2020 (Apr. 2021), available at:

2. G7 Finance Ministers meeting, June 2021: communiqué (June 2021), available at:

3. For more information, see WilmerHale's client alert Biden to Federal Government: Assess Financial Risk of Climate Change, available at:

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