ESG Insider: US Federal Reserve climate scenario analysis finds big banks face data gaps, modeling challenges
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The US Federal Reserve on May 10 released summary results of a pilot climate scenario analysis it undertook with six of the nation's largest banks to explore the resiliency of their business models to climate-related financial risks.
The Fed found that banks face significant data gaps and modeling challenges in estimating the financial impacts of "highly complex and uncertain risks over various time horizons." It also found that the banks participating in the exploratory pilot exercise — Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — took a wide range of approaches to consider the possible implications of different physical and transition risk scenarios.
The Fed also noted that the uncertainties around the timing and magnitude of climate-related risks made it hard to know how best to incorporate these into the banks' risk management frameworks on a business-as-usual basis.
This week’s newsletter features new research by S&P Global Ratings on global trends in climate change litigation, and a report from S&P Global Commodity Insights into the slowing pace of Inflation Reduction Act investments this year compared to 2023. In this week's episode of the ESG Insider podcast, we sit down with International Sustainability Standards Board Vice Chair Sue Lloyd at the third annual S&P Global Sustainable1 Summit in London.
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Chart of the Week?
Less than half of the leading listed companies in the US have a net-zero target, according to the S&P Global Sustainable1 Net-Zero Commitments Tracker dataset. Read the research here .
S&P Global Ratings — Climate Litigation: Assessing Potential Impacts Remains Complex
S&P Global Ratings explores trends in climate litigation and aims to achieve a better understanding of the potential influence of climate litigation on the creditworthiness of issuers and when such exposure might translate into a material financial impact.
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IRA investments top $123B but are slowing, business group finds
S&P Global Commodity Insights reports on data from business group E2 showing that the pace of new IRA investments has been slowing significantly this year compared with 2023, when there were three or four times as many clean energy announcements every month.
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World's largest direct air capture plant enters operation in Iceland
A facility in Iceland that can capture up to 36,000 mt of CO2 from the air annually has started commercial operations in a boost to the nascent carbon removal sector, S&P Global Commodity Insights reports.
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US DOE proposes long-awaited national-interest electric transmission corridors
The US Energy Department proposed long-awaited national-interest electric transmission corridors May 8, a key step in awarding up to $4.5 billion in federal support for power grid expansion, S&P Global Commodity Insights reports.
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Podcast
ESG Insider Podcast
ISSB Vice Chair Sue Lloyd talks aligning sustainability standards across jurisdictions International Sustainability Standards Board Vice Chair Sue Lloyd discusses global uptake of the ISSB’s first two standards, launched in June 2023. She also tells us what to expect from the organization for the remainder of 2024, including a big focus on helping jurisdictions around the world align with ISSB standards. >>Listen on Spotify ?or Apple Podcasts
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