ESMA establishes environmental risk category

Posted on February 25, 2022 by Editor

We were interested to note an addition to the latest semi-annual Trends, Risks and Vulnerabilities Report from the European Securities and Markets Authority (ESMA), which finds a continuing high risk of market corrections. For the first time, the report includes environmental risk as a category in the risk dashboard. In addition, new risk indicators on climate-related disclosures, firms’ reputational risk and EU carbon markets are covered in the statistical annex.

In an accompanying analysis on monitoring environmental risks, ESMA concludes that “Climate-related policies and public awareness of the climate emergency have put climate risks at the core of the agendas of many authorities and private-sector firms. The growing interest in and shift to sustainable investing confirms a public urge to consider wider ESG factors in investment decision-making. Meanwhile, the increasing visibility of climate change impacts, including on financial markets, makes it imperative to account for this new risk source in our risk monitoring and analysis.” A sign of the times indeed!

Read more here and here.

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