This report examines the availability of data with which to monitor and assess climate-related risks to financial stability. It is the latest in a series of FSB reports concerning climate change. Previous reports were the FSB’s stocktake of financial authorities’ experience in including climate risks as part of their financial stability monitoring, and The Implications of Climate Change for Financial Stability.

Risks to financial stability from climate change differ in their nature and magnitude from other risks to the financial system. Climate change is a global phenomenon and can impact financial systems across all jurisdictions. However, its impact differs substantially across entities, sectors and economies. Climate-related risks may be highly non-linear, and their effects on the financial system subject to substantial uncertainty and tail risk.

The specific nature of climate-related risks has a bearing on the data needed to monitor and assess their implications for financial stability. This data should:

  • Capture exposures of financial firms to climate-related risks, particularly those of a scale or concentration that might threaten financial stability.

  • Support a global comparison and aggregation of financial firms’ exposures to climate-related risks.

  • Support forward-looking assessments of climate-related risks to financial stability.

  • Capture climate-related risk transfer and mitigation.

The report outlines priority areas of work – some of which are already in progress – that should address important data gaps to improve the monitoring and assessment of climate-related risks to financial stability:

  • improving the availability and consistency of data on the underlying drivers of climate-related risks;

  • developing a baseline global sustainability reporting standard under robust governance and public oversight – the FSB welcomes the IFRS’s programme of work in this regard;

  • improving the quality and consistency of data on financial institutions’ exposures to climate-related risks arising from their exposures to non-financial counterparties

  • developing – including via engagement with private-sector providers of data – forward-looking metrics on climate-related risks, both at the level of individual firms and the financial system as a whole;

  • widening and harmonising data on the degree to which individual financial institutions’ exposures to climate-related risks are mitigated by insurance provision;

  • comparing authorities’ experiences of implementing scenario analysis as a means of assessing the resilience of the financial system to climate-related risks, and to identify relevant data gaps; and

  • the NGFS continuing to refine and develop scenarios, which financial authorities should make use of in their scenario analysis, as appropriate in order to align the data and methodologies used in such analysis.

Work in these areas should be undertaken in a manner appropriate to authorities’ mandates and domestic legal frameworks.

This report was prepared in close coordination with other international bodies and draws on a number of inputs. In particular, it has benefited from contributions from the BCBS, IAIS, IMF, IOSCO, OECD and the World Bank. It has also been informed by the work of the Task Force on Climate-related Financial Disclosures (TCFD).

The report complements the NGFS’s Workstream on Bridging Data Gaps. This NGFS workstream is undertaking a more comprehensive assessment of the availability of data, including to facilitate the scaling up of green finance.