Senior Associate, Iken Associates paul@ikenassociates.com
Until recently the direct sustainability pressures on businesses from their finance sector partners have been relatively limited. Development banks with their well-established protocols and responsible investors have been major actors in this space and remain engaged but the whole landscape is changing rapidly.
The surge of interest in sustainability across finance means that greater interest/pressure is going to be felt – presenting both a threat and an opportunity. Developments such as the EU Sustainable Finance Disclosure Regulations and the Taxonomy are likely to see investors become more engaged around sector specific transition targets and progress. Running in parallel are concerns that businesses in their portfolios can pose risks to the individual bank/insurer and indeed the overall system, a central development being the TCFD (and in time TNFD) .
Examining the current thinking of central banks and supervisors gives us a glimpse into the future of finance sector regulation and its ultimate implications for their clients. We can certainly expect more robust assessment of sustainability related challenges along the value chain, particularly where they increase credit/insurance risk. The focus will move beyond greenhouse gases to consider water, nature and social issues. Beyond the physical impacts of climate change issues associated with nearer terms policy consequences (eg extension of protected areas) will be explored. While well managed businesses might expect more favourable treatment, investors will also be looking for investment opportunities offering climate and related solution (eg nature based solutions).
Biography
Dr Paul Pritchard has wide experience in corporate sustainability with a focus on financial services. While at RSA Insurance Group he was Group Environmental Adviser and also lead the operational risk function. He now works with recent work supporting Aviva’s external expert climate risk panel, authoring the BSI/BEIS Sustainable Finance Framework Guide (PAS7340) and joint authoring a guide to TCFD. He has served as Vice Chairman of IEMA and as a Fellow at the University of Cambridge Institute for Sustainability Leadership (CISL) where he focused on the integration of sustainability into financial services.
