A Future In Our Hands | Alwin Adityo | TEDxTzu Chi School Youth

TL;DR

Climate change poses risks to the banking industry, including physical and transition risks, which can manifest as credit, liquidity, market, operational, and reputational risks.

Transcript

hello good afternoon uh ladies and gentlemen uh the sui School leadership uh let me see guest speakers here uh parents students of the sui School uh thank you for inviting me apparently this is the first tedex event at the school so it's an honor for me to be here and share with you my thoughts on sustainability and estd from a banking Regulators p... Read More

Key Insights

• ✳️ Climate change poses significant risks to the banking industry, including physical and transition risks.
• ✳️ These risks can manifest as credit, liquidity, market, operational, and reputational risks for banks.
• 💚 Financial regulators have introduced sustainability practices, such as regulations on sustainable finance and the issuance of green bonds, to address these risks.
• 🥡 International bodies, including the Basel Committee on Banking Supervision and the IFRS, are also taking steps to address climate change risks in the banking sector.
• 👻 Gradually introducing sustainability practices allows the banking sector to adapt to long-term risks over the next few decades.
• 👨‍🔬 The future generation has a crucial role in researching and studying sustainability issues related to climate change from a financial perspective.
• 🫢 The Paris Agreement and Indonesia's commitment to reduce greenhouse gas emissions highlight the importance of addressing climate change as a global priority.

Questions & Answers

Q: What are the main risks that climate change poses to the banking sector?

Climate change can result in physical risks, such as economic damages from natural disasters, and transition risks, such as disruptions caused by a rapid shift to a low-carbon economy. These risks can manifest as credit, liquidity, market, operational, and reputational risks for banks.

Q: How are financial regulators addressing climate change risks in the banking industry?

Financial regulators have introduced sustainability practices, including regulations on sustainable finance and the issuance of green bonds. They have also conducted capacity-building programs to educate regulators, supervisors, and the financial industry on sustainable finance. Additionally, they are developing stress testing frameworks to assess climate risk for banks.

Q: Why is it important to introduce sustainability practices to the banking sector gradually?

Sustainability practices and the risks associated with climate change are relatively new and will manifest in the future. Introducing these practices gradually allows the banking sector to adapt and prepare for long-term risks over the next 50 to 100 years.

Q: How are international bodies addressing climate change risks in the banking industry?

The Basel Committee on Banking Supervision has made climate change and its impact on banks a priority. They have developed guidelines for regulating and supervising banks to mitigate climate change risks. The International Financial Reporting Standards (IFRS) is also developing frameworks to enhance the disclosure of climate-related risks in companies and financial institutions.

Summary & Key Takeaways

• Climate change presents two main risk drivers to the banking sector: physical risks, which result from increased severity and frequency of natural disasters, and transition risks, which occur when there is a rapid shift to a low-carbon economy.

• The banking industry faces credit, liquidity, market, operational, and reputational risks as a result of climate change impacts.

• To address these risks, financial regulators have introduced sustainability practices, such as regulations on sustainable finance, green bonds, and capacity-building programs.