Banks chafe at pace of new climate regulation
The banking industry has become frustrated by slow regulatory progress as it waits for necessary standardization of climate risk assessments and disclosure policies to meet net-zero targets.
There has been much speculation over what was behind HSBC asset management’s now-suspended head of responsible investment Stuart Kirk’s recent incendiary presentation on climate change. The administrative burden of having to quantify long-term climate risk on loan instruments with an average tenor of six to seven years certainly seems to have been part of it.
“The amount of work these people make me do,” he lamented, criticising central banks and regulators’ obsession with climate-related risk-assessment procedures.
Aside from pushing industry leaders to question their own company culture and commitment to net zero, Kirk’s comments certainly highlighted the ongoing frustrations within the banking sector over the pace of administrative processes that underpin the slow transition towards responsible methods of investing.
The message from regulatory bodies is clear: investment banks need to clean up their portfolios, provide adequate climate-risk assessments, and get their clients over the net-zero finish line as soon as possible.
But sustainable investment teams want policymakers and regulators to meet them halfway.
“In a lot of sectors, we see our clients having the ability to go faster than regulation,” says Tanguy Claquin, global head of sustainability at Crédit Agricole CIB.