Management Solutions publishes a new white paper that aims to provide a perspective on the different methodologies for measuring climate and environmental risks, focusing on the financial and insurance sector 


The adoption of sound measurement methodologies by the financial sector is not only a regulatory requirement, but also a strategic imperative. It provides the basis for developing innovative financial products, such as green bonds and sustainability-linked loans, that can incentivize and support the transition to a sustainable economy. Furthermore, by accurately assessing and managing C&E risks, financial institutions can protect themselves against the reputational, operational and financial risks associated with climate change and environmental degradation, while playing a key role in mobilizing the investments needed to mitigate their effects. 


Measuring climate and environmental risks in the financial sector

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In this context, this study aims to provide a perspective on the different methodologies for measuring climate and environmental risks, focusing on the financial and insurance sector. To this end, the paper is structured in four sections, which aim to: (i) summarize the supervisory requirements regarding the measurement of C&E risks; (ii) discuss different quantitative approaches that can be applied to the measurement of physical and transitional climate risks, depending on the nature of the portfolios; (iii) propose approaches to address the quantification of environmental risks; and (iv) show the application of the described methodology through a case study of the measurement of transitional climate risk impacts on a corporate bond portfolio. 

The white paper “Measuring climate and environmental risks in the financial sector​" is now available for download in spanish, english y portugu​êse.