According to the World Economic Forum's Global Risks Report 2020, the top risks to our global economy are environmental. This gives a renewed urgency to work together and produce effective solutions - a responsibility that shouldn't just rest on governments worldwide, some of whom are still debating the authenticity of climate change.

In contrast, investors are increasingly decisive and demonstrating this by channelling funds into sustainable assets. This is the growing power of green finance. Yet banks are hampered by the need for better data, so they can make informed and responsible decisions around whom they choose to finance.

Resilience in a fast-changing world

There is huge potential in green finance, whether it's backing new technologies or low-carbon infrastructure projects with the aim of building a sustainable financial future. An opinion piece in The New York Times at the start of the year predicted 'the world's first trillionaire will be a green-tech entrepreneur?.

The great opportunities of a green future should be fully understood. Our research found that climate change, as a priority, ranked lower among banking leaders than Brexit, political instability and globalisation. Adapting to changing conditions is crucial, and the conditions have certainly changed.

Since the financial crisis of 2007 regulatory focus has, of course, been on financial stability, with a shift only recently towards operational resilience. Towards the end of last year, the FCA, PRA and BoE published joint papers on new requirements to strengthen operational resilience in the financial services sector.

Time to act

It makes sense that the scope of operational resilience should expand to include the climate crisis. As a business-critical threat, it is now seen as an inevitability rather than a possibility; only the scale of impact is up for debate. How companies react to it while protecting customers and shareholders will be a crucial part of the global response. Of course, the ideal time to act was yesterday: resilient organisations must focus on anticipation, prevention and adaptation, rather than recovering against the effects of climate change.

This cannot be achieved in isolation. Cross-sector collaboration and close engagement with regulators and key organisations is vital. That's why I urge banks to adopt the Task Force on Climate-related Financial Disclosures (TCFD), which helps investors to understand their financial exposure to climate risk.

As mentioned earlier, financial services firms need improved data to make more responsible decisions. But disclosure is slow, with many companies saying they lack the tools to help them assess their climate impact. Here, we have to think laterally: the skills that equity research analysts have, for example, could be applied to getting those disclosures in place.

A final thought on working together

While there are many voices in the industry who are calling for mandatory disclosure, I?m optimistic that more and more global financial firms will support TCFD because they simply want to. They will hopefully see it as a valuable step in adapting to changing business conditions and making economies more stable.

The headlines may be negative, but our response needn't be.