Photo: Irina Bujor / “Kommersant”
Climate change may become a source of threat to banks, worsening their financial results and increase associated costs. This is stated in the report of the Central Bank of Russia for public organizations, according to RIA Novosti.
Among the reasons for concern are named a possible change in the value of securities, foreign currency rates and price quotes of commodity assets in the market.
For example, investments in the polluting sector may become less profitable due to the development of alternative energy sources and pollution of the environment. Natural phenomena, the rise in connection with climate change may reduce the value of companies that depend on such disasters.
Separately they increase the frequency of insurance payments, which will lead to increased reinsurance protection. And this, in turn, will make the product more expensive will reduce demand and the level of protection. In addition, the Central Bank recalled the reputational risks that have to be taken into consideration by insurers, working with non-environmental companies.
Extreme weather events can have an impact on the office premises of the Bank. Organizations will have to increase spending on risk and insurance electricity, which will increase operational risk.
The increase in the probability of defaults of borrowers who are in some way connected with the sectors exposed to climate risks, complicates the situation. Might be impaired and the guarantee, even secured by real estate.
Earlier, the world wildlife Fund (WWF) stated that losses of world economy due to environmental problems for 30 years, can reach eight trillion pounds (660,72 trillion rubles). A number of large funds have now cut their investments in companies that are the worst look from the point of view of sustainability. Among them is the world’s largest Government pension Fund of Norway (GPFG).
Video, photo All from Russia.