“As a result, you could get very big differences in risk management approaches, big differences in disclosures, and. “If it’s not done in a coordinated fashion, then financial institutions will end up being all over the place,” Adam Gilbert, partner at PwC, told Regulatory Intelligence. That would make compliance with future rules much more difficult. However, coordination and collaboration among regulators is key, without which financial firms will be grappling with varying and possibly conflicting guidance. Once developed, financial institutions could draw on these taxonomies to analyze the impact of their financing and investing activities and align financing policies with them to achieve climate impact goals, according to a report by Accenture. For asset and investment managers, for example, such a taxonomy would allow them to classify assets with respect to an issuer’s or borrower’s contribution to mitigating or adapting to the impacts of climate change. The development of such a joint taxonomy, often referred to as a “green taxonomy,” would help financial participants understand what types of assets regulators view as green, a designation that would have multiple benefits across the industry. “Regarding his other priorities, look for Hsu to take coordinated action with other regulators on climate change, with a potential first step being the development of a joint taxonomy,” PwC said. In a recent analysis by PwC, the consultancy, acting comptroller of the currency Michael Hsu, was cited as a regulator who might take an active role in collaborating with other agencies on a joint climate taxonomy. With climate risk regulation still in the development phase, coordination among banking, securities and derivatives regulators is seen as an essential step toward providing firms with a clear understanding of what is expected from them.
regulators given the patchwork of responsibilities and rules of multiple agencies. Speaking with one voice has long been a challenge for U.S. financial regulators, say experts, with efforts by the European Union possibly serving as a model to future regulation. NEW YORK(Thomson Reuters Regulatory Intelligence) - Giving financial firms a common taxonomy and framework for managing their climate risk exposures is seen as one of the first coordinated actions by U.S.
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