UNEP FI TCFD Banking Pilot Projects 

NEW for 2021: Phase III

Phase III of the TCFD banking pilot is expected to commence in January 2021. This pilot will more fully explore climate stress testing, the integration of physical and transition risk assessments, and sector-specific risks and opportunities. If you are interested in participating in Phase III or would like to learn more, please contact David Carlin (David.Carlin@un.org).


Phase II (2019 – 2021)

Building on the success of Phase I, from 2019-2020, UNEP FI’s Phase II TCFD Banking program helped thirty-nine global banks on six continents to enhance their climate risk toolkits and improve their climate risk disclosures. Supported by a wide range of expert partners, participants explored both physical and transition risks and opportunities.

Phase II focused on the four pillars of TCFD disclosures: Governance, Strategy, Risk Management, and Metrics & Targets. The program developed tools, frameworks, and thought papers that enabled participants to better address each of the recommended disclosures within these pillars. Beyond building capacity for participants, the Phase II outputs aimed to establish good practices for TCFD disclosures across the financial sector. The following figure shows how each specific output from Phase II connects to a TCFD pillar. Below the figure is a brief description and link to each of these publicly accessible outputs.

Outputs of Phase II:

  • Charting a New Climate (with Acclimatise)- a state-of-the-art blueprint to support financial institutions in navigating the changing physical climate risk landscape. The report explores physical risk data, tools, correlation analyses, heatmapping, and opportunity identification among other crucial topics.
  • From Disclosure to Actiona stock-take on how financial institutions are incorporating climate risk into their operations. Numerous bank case studies and UNEP FI TCFD participant survey results provide details on the latest practices. The paper also provides concrete and actionable guidance on integrating climate risk throughout an organization.
  • Beyond the Horizon– an exploration of the ways in which the UNEP FI TCFD program advanced transition risk analysis. A major feature of the report is a comprehensive transition risk heatmap developed by the participating institutions that provides perspectives into how climate-sensitive sectors may be impacted by a low-carbon transition.
  • TCFD Playbook (with the Institute for International Finance)- developed through consultation with member financial institutions, this document provides guidance on and examples of leading practices around TCFD reporting in the financial sector. This desk reference also aims to enhance the depth and comparability of TCFD disclosures by financial institutions.
  • Transition Check (with Oliver Wyman)- a user-friendly webtool that enables financial institutions to assess transition risks across a wide range of geographies, economic sectors, and climate scenarios (including the latest NGFS scenarios). Transition Check produces loss estimates, PDs, and LGDs in a clean, downloadable format to support internal assessments and TCFD reporting.
  • Understanding Climate Scenarios (to be released in 2021) – UNEP FI is working with climate experts at CICERO to provide a deep-dive into integrated assessment models and their applications within the financial sector. This report will explore the strengths and limitations of present models for conducting climate risk analysis and suggest areas for further exploration and enhancement. A number of case studies from UNEP FI members will also be featured showing how they have conducted climate scenario analyses.
  • Disorderly Transitions (to be released in 2021) – the low-carbon transition is not a long-term challenge for certain sectors, but a material near-term concern for the wider economy. Financial institutions must appreciate the risks inherent in a disorderly transition whereby delayed or uncoordinated actions on climate goals create economic disruption and dislocation. The paper will explore risk factors across the economy and provide insights into the NGFS disorderly transition scenarios used to model it. A number of case studies from UNEP FI members will also be featured showing how they have conducted climate scenario analyses.
  • TCFD database (to be released in 2021)- UNEP FI produced an exhaustive survey of our membership regarding climate disclosure and climate scenario analysis practices. Now, we are working to make this data accessible to financial institutions so that they can benchmark their practices to others across the industry.

 


Phase I (2017 – 2018)

UNEP FI, together with 16 of the world’s leading banks, set out on a year-long project to pioneer and further develop transition and physical assessment models and metrics to enable scenario-based, forward-looking assessment and disclosure of climate-related risks and opportunities.

The contributions of the pilot have better equipped participating banks and the banking industry at large to implement the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).

Access the outcomes of the phase I :

Extending our Horizons: Assessing Credit Risk and Opportunity in a Changing Climate– Published in April 2018, the report details the jointly developed methodology for scenario-based assessment of the transition-related risk and opportunities.

Navigating a New Climate: Assessing Credit Risk and Opportunity in a Changing Climate – The second report, released in July 2018, covers physical risk assessment methodologies.

The UNEP FI TCFD pilot group included the following UNEP FI member banks: ANZ, Barclays, BBVA, BNP Paribas, Bradesco, Citi, DNB, Itaú, National Australia Bank, Rabobank, Royal Bank of Canada, Santander, Société Générale, Standard Chartered, TD Bank Group and UBS.

Member Reports :

TCFD Reporting by UNEP FI Pilot Banks

All 16 banks participating in the UNEP FI TCFD Pilot committed to publishing an initial TCFD disclosure by mid-2019.

Please see first examples here:

ANZ TCFD Report            Citi TCFD Report

Webinars :

Transition (Policy) Risks Webinar

On 15th May, UNEP FI set up the webinar on the transition-related methodology, the scenarios, risk and opportunities considered throughout the 10-month pilot project and the first report. Please click here to hear the recorded webinar.

Physical Risks Webinar

On 14th August, UNEP FI conducted a webinar on the physical-related risk and opportunities. The webinar discussed the results of the collaboration between UNEP FI and sixteen of the world’s leading banks. The banks set out to develop and test a widely applicable scenario-based approach for estimating the impact of climate change on their corporate lending portfolios as recommended by the Recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Read more about the webinar here and access the recording of the webinar here.

TCFD Pilot for Banks 2.0 

A second phase of TCFD for banks has launched over Summer 2019. For more information please contact David Carlin.