Climate Change and the Financial Services Sector: An Appreciation of the UNEPFI Study

Climate change poses a major risk to the global economy. The increasing frequency of severe climatic events, coupled with the unwise nature of economic development, has the potential to create unsustainable levels of damage for the commercial and public financial sectors. The greenhouse gases that create this problem are long lived, so action is urgently needed. The Kyoto Protocol is an important step, but it does not go far enough. A long-term international political framework is required based on the principles of precaution and equity. This can be achieved most effectively through market solutions. The financial sector has a key role to play but there are cognitive, political, analytical and operational barriers. These obstacles can be overcome by creating a focus for key actions, and through close collaboration with policymakers.