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FSB work on climate risk disclosure a 'priority', says Norges Bank

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Norges Bank Investment Management (NBIM) has welcomed the Financial Stability Board’s efforts to draft “homogeneous, appropriate and consistent” reporting guidelines for climate risks.

The manager, responsible for Norway’s NOK7.1trn (€763bn) Government Pension Fund Global, was responding to the Task Force on Climate-Related Financial Disclosures (TCFD) chaired by businessman Michael Bloomberg.

It welcomed the TCFD’s attempts to draft an “effective” framework.

In a letter co-signed by Petter Johnsen, CIO of equity strategies, and William Ambrose, global head of ownership strategies, NBIM said the development of any such framework of climate risks was a “priority”.

It said the TCFD’s work could see consistent reporting across not only jurisdictions but also sectors and asset classes.

The task force has already said it would like to introduce a reporting template for real assets as part of its work

“Sectoral guidelines are necessary, both to ensure appropriate information is disclosed and to avoid an unnecessary, heavy general reporting burden,” the letter continues.

“A parsimonious set of consistent and comparable indicators, related to absolute and relative direct and indirect emission levels and future targets, as well as information about investment plans, underlying assumptions and selected asset-related information, could and should be achievable for most sectors.”

The letter, released by NBIM earlier this month, also warns the TCFD about the differing types of climate risk facing investors.

“Investors in secondary markets will face different risks and opportunities than, for example, the mortgage banks or insurance companies,” it adds.

“Retail investors or investors without defined liabilities will be exposed to other challenges than traditional pension funds or life insurers.”

The letter concludes by stressing the importance of continued research into climate-related risks.

“A thorough understanding of the economy-wide and financial implications of climate change – and the appropriate weighing of impacts, costs and benefits – is necessary to arrive at a useful set of reporting items, within the right context.”

The asset manager has extended grants to research on long-term ownership behaviour and engaged ownership.

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