The global financial crisis of 2008 and 2009 spawned a new institution, the Financial Stability Board, set up by the G20 nations to ensure balance in the world’s financial markets. In the eight years since, the FSB has addressed issues like credit ratings and market liquidity. But more recently, the organization has turned its attention to climate risk.

Last June, the FSB released the findings of its Task Force on Climate-related Financial Disclosures. It urges companies to assess, disclose, and plan for the “physical, liability, and transition risks associated with climate change.”

The recommendations are clearly directed at the finance and risk management functions of major corporations and financial institutions, many of which would have considered climate change the purview of the sustainability department. They may now be wondering what has changed. The answer is that FSB chairman Mark Carney has mainstreamed thinking that has existed in certain parts of the financial, business, and research communities for some time. The FSB now wants to see its recommendations adopted by national regulators.

This should command the attention of corporate finance professionals. A quick glance at the final report from the FSB task force shows it is firmly rooted in the language of finance. It recognizes that for many companies, climate-risk issues are likely to emerge in the medium to long term, and scenario analysis should be used to manage and report on them.

But for some sectors, climate risk is an immediate one. A prime example of where policy, technology, and market risks have converged in relation to climate is in coal production.

Climate-motivated policy around the world in the last decade has disfavored the fuel as an energy source. Large utilities, reluctant to make long-term investments in new coal plants, have opted for gas and renewable power, leaving the viability of coal production and its infrastructure in doubt. If these assets are impaired, at what rate do they need to be written down?

In 2017, leaders of the UK, France, India, and Norway all expressed their desire to do away with internal combustion cars from their streets in favor of electric vehicles. Volkswagen has announced plans to electrify its entire fleet, while Toyota plans to achieve 100% of its sales either from zero emission or hybrid powered technologies by 2050.

The U.S. Energy Information Administration estimates that at least half of the petroleum produced in the United States goes into gasoline for automobiles. Whatever the precise timelines, these trends do not bode well for an oil industry currently suffering from precariously balanced supply and demand.

At the end of 2016, UK oil giant Royal Dutch Shell shocked the market by predicting that oil demand could peak within five years. A decline in the sector could result in asset impairment on a far wider scale than coal. For example, a large portion of the perhaps 250,000 service stations globally may need to be retired and some remediated. And there are the billions of dollars of oil reserves on the balance sheets of producers along with pipelines, infrastructure, and oil service capacity in the extended value chain.

These are examples of financial risks appearing now and in the short-term future. Many more may be in store in the medium and long term.

Regulators, with the great financial crisis still in memory, are acutely aware of what happens when the financial system becomes aware of a major systemic risk abruptly and late in the game. It is for this reason that Mark Carney and the FSB want the world’s CFOs to have climate risk clearly on their radar now.

Dylan Tanner is the executive director of InfluenceMap, a U.K.-based nonprofit organization that analyzes companies’ influence on climate policy and legislation.

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