Noting that climate change presents both risks and opportunities for the financial services industry and that, as a result, the industry must build reliable, consistent data sets, metrics, methodologies and standards to ensure that climate-related risks are appropriately understood, managed and disclosed, the Principles (which the release elaborates on) are:
- Set science-based climate policy goals that align with the Paris Agreement
- Increase and strengthen U.S. international engagement
- Provide clear long-term policy signals that foster innovation in financial services
- Price carbon and leverage the power of markets
- Minimize costs and support jobs in the transition
- Foster international harmonization of taxonomies, data standards and metrics
- Promote more robust climate disclosure and international standards
- Ensure climate-related financial regulation is risk-based
- Build capacity on climate risk modeling and scenario analysis
- Strengthen post-disaster recovery, risk mitigation and adaptation
The release also noted that transitioning to a lower-carbon economy will require the development of alternative fuels and new technologies, calling for trillions of dollars of investment in innovation and resilient infrastructure.
In the release, the group also called for better climate disclosure and convergence to an international disclosure standard (such as those developed by the Task Force on Climate-Related Financial Disclosures), a continued focus on a well-functioning U.S. financial system and U.S. engagement in international climate policy discussions.
1. The group included the American Bankers Association, CRE Finance Council, Financial Services Forum, Bank Policy Institute, International Capital Market Association, Institute of International Bankers, Financial Industry Association, Institute of International Finance, International Swaps and Derivatives Association, Investment Company Institute and the Securities Industry and Financial Markets Association. The release noted that several other trade associations, including the American Property Casualty Insurance Association, and individual financial institutions had provided feedback on the Principles.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe - Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2020. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.