Strengthening corporate governance for a greener financial sector
Flood in Bangkok, Thailand, in 2011. UN DDR/Creative Commons
But which are the options available to financial supervisory authorities?
Sound corporate governance arrangements are essential to the functioning of financial institutions and to the financial system more broadly. Effective corporate governance can also be instrumental to successfully manage climate-related risks, as highlighted by the Central Banks and Supervisors Network for Greening the Financial System (NGFS) in a recent report.
Two of these key steps should be highlighted:
First, supervisors could set out expectations regarding the board of directors’ composition. In particular, supervisors could expect that banks’ boards include members with experience on climate-related financial risks. International regulation emphasizes the linkage between board qualification and the ability to exert an effective
<p><span>The FCA has published a </span><a rel="noopener noreferrer" target=" blank" class="ext" href="https://www.bankofengland.co.uk/prudential-regulation/publication/2021/april/joint-pra-and-fca-statement-on-the-fsb-peer-review-on-remuneration">joint statement with the PRA<span class="ext"></span></a><span> welcoming the Financial Stability Board’s (FSB) Peer Review of the UK’s remuneration regime.</span></p>