Status report on financial institutions’ practices with respect to risk differential between green, non-green and brown financial assets and a potential risk differential
The NGFS Status Report on Financial institutions’ experiences from working with green, non-green and brown financial assets and a potential risk differential gives an overview of the current state of play of industry practices. This report highlights the main findings of a survey conducted by the NGFS among 49 banks and five insurance companies around the globe. This survey aimed at understanding how financial institutions kept track of the specific risk profiles of green, non-green and brown financial assets (loans and bonds), developed specific risk metrics and analysed potential risk differentials. Although not conclusive on the existence of a risk differential, the report shows positive trends among financial institutions to better account for climate related risks of their assets and suggests encouraging ways forward in the analysis via forward-looking methodologies. The report recalls the impossibility for a complete assessment without harmonized green and brown taxonomies.