Many national regulators are already undertaking regulatory and supervisory initiatives on climate-related financial risks, according to a BIS report, although most have not yet factored the mitigation of such risks into the prudential capital framework.

The Basel Committee on Banking Supervision recently established a high-level Task Force on Climate-related Financial Risks (TFCR), which began its work with a stocktake of the work its 27 members are conducting on the issue.

The majority of members - central banks and regulators - are carrying out various initiatives, such as raising awareness of such risks with banks and external stakeholders, requiring or encouraging banks to disclose information on to climate-related financial risks, stress-testing of such risks and promoting the growth of sustainable finance.

Around two-fifths are going further and have issued, or are in process of issuing, more principles-based guidance regarding climate-related financial risks.

However, the majority of members have not factored, or have not yet considered factoring, the mitigation of such risks into the prudential capital framework.

The TFCR is now set to embark on a set of analytical reports on climate-related financial risks, including on the transmission channels of such risks to the banking system as well as on measurement methodologies.