Greening Finance: Supervising Climate-related Financial Risks Training Course

Introduction

The escalating threat of climate change presents significant and pervasive financial risks to capital markets, demanding a proactive and integrated supervisory response from central banks. This crucial training course directly addresses this imperative, equipping supervisors with the essential knowledge and frameworks to effectively integrate climate risk assessment into their oversight of capital market participants and actively promote the development of green finance. Participants will gain a comprehensive understanding of the various channels through which climate-related financial risks manifest, learn methodologies for their assessment, and explore strategies for fostering a resilient and green finance ecosystem through effective supervision. Mastering the supervision of climate-related financial risks in capital markets is paramount for safeguarding financial stability and supporting the transition to a sustainable economy.

This intensive training course delves into the specific ways in which climate-related financial risks – both physical risks (e.g., extreme weather events) and transition risks (e.g., policy changes, technological shifts) – impact capital market participants, including listed companies, asset managers, and financial intermediaries. We will explore methodologies for climate risk assessment, such as scenario analysis and stress testing, and examine how central banks can incorporate these assessments into their supervisory practices. Furthermore, the course will focus on strategies for promoting the development of green finance, including the supervision of green bonds and other sustainable financial instruments, fostering improved climate-related disclosures, and encouraging the integration of ESG (Environmental, Social, and Governance) factors within capital markets.

Target Audience

• Central Bank Supervisors
• Financial Regulators
• Climate Risk Analysts
• Sustainability Officers
• Risk Management Professionals
• Investment Analysts
• Policy Advisors

Course Objectives

• Understand the fundamental concepts of climate change and its implications for financial risks in capital markets.
• Identify the different types of climate-related financial risks: physical and transition risks.
• Learn methodologies for assessing climate-related financial risks at both micro and macro levels.
• Understand how central banks can integrate climate risk assessment into their supervisory frameworks for capital market participants.
• Explore strategies for promoting the development of green finance and sustainable investment within capital markets.
• Learn about international initiatives and best practices in supervising climate-related financial risks.
• Understand the role of climate-related disclosures and reporting frameworks (e.g., TCFD) in supervision.
• Develop skills in analyzing climate-related data and incorporating it into supervisory processes.
• Explore the use of scenario analysis and stress testing for assessing the resilience of capital markets to climate risks.
• Understand the supervisory considerations for green bonds and other sustainable financial instruments.
• Learn how to engage with capital market participants on their climate risk management strategies.
• Understand the potential for systemic risks arising from climate change and the role of macroprudential supervision.
• Explore the intersection of climate risks with other financial risks and the need for integrated supervision.

Duration

10 Days

Course content

Module 1: Climate Change and its Financial Implications for Capital Markets

• Understanding the science of climate change and its projected impacts on the global economy and financial system for your module.
• Identifying the direct and indirect channels through which climate change creates financial risks.
• Exploring the time horizons and uncertainty associated with climate-related financial risks.
• Understanding the difference between climate risks and other environmental, social, and governance (ESG) factors.
• Analyzing the potential for both risks and opportunities arising from the transition to a low-carbon economy.

Module 2: Physical Climate Risks and their Impact on Capital Markets

• Understanding the various types of physical climate risks, including extreme weather events (e.g., floods, heatwaves, storms) and chronic changes (e.g., sea-level rise) for your module.
• Analyzing how physical risks can impact asset values, business operations, and supply chains of capital market participants.
• Exploring methodologies for assessing the exposure and vulnerability of financial assets to physical climate risks.
• Understanding the role of climate data and modeling in physical risk assessment.
• Examining the implications of physical risks for insurance and reinsurance markets.

Module 3: Transition Risks and their Impact on Capital Markets

• Understanding the different types of transition risks arising from the shift towards a low-carbon economy, including policy changes, technological advancements, and changing consumer preferences for your module.
• Analyzing how transition risks can impact the profitability and competitiveness of different sectors and companies.
• Exploring methodologies for assessing the exposure of financial assets to transition risks.
• Understanding the role of carbon pricing mechanisms and other policy levers in driving transition risks.
• Examining the opportunities associated with green technologies and sustainable business models.

Module 4: Integrating Climate Risk Assessment into Microprudential Supervision

• Exploring how central banks can incorporate climate risk assessments into their supervision of individual capital market participants (e.g., banks, insurers, asset managers) for your module.
• Understanding how to assess the governance, strategy, and risk management processes of supervised entities with respect to climate risks.
• Analyzing the integration of climate risks into existing risk categories (e.g., credit risk, market risk, operational risk).
• Developing supervisory expectations and guidance on climate risk management.
• Examining the use of climate-related data and metrics in microprudential supervision.

Module 5: Promoting Green Finance and Sustainable Investment in Capital Markets

• Understanding the concept of green finance and its role in financing the transition to a sustainable economy for your module.
• Exploring different types of green financial instruments, such as green bonds, green loans, and sustainable investment funds.
• Analyzing the challenges and opportunities in promoting the development of green finance markets.
• Understanding the role of central banks and regulators in facilitating green finance.
• Examining policy measures and incentives to encourage green investments.

Module 6: International Initiatives and Best Practices in Climate Risk Supervision

• Reviewing key international initiatives and recommendations related to climate-related financial risks (e.g., NGFS, FSB, IOSCO) for your module.
• Analyzing best practices adopted by different jurisdictions in supervising climate risks in capital markets.
• Understanding the role of international cooperation and information sharing on climate risk supervision.
• Exploring the development of global standards and taxonomies for green finance.
• Examining the challenges and opportunities in achieving international convergence on climate risk supervision.

Module 7: The Role of Climate-Related Disclosures and Reporting Frameworks

• Understanding the importance of transparent and comparable climate-related disclosures for effective supervision and market functioning for your module.
• Exploring key climate disclosure frameworks, such as the Task Force on Climate-related Financial Disclosures (TCFD).
• Analyzing the challenges and opportunities in implementing and supervising climate disclosures.
• Understanding the role of standardization and interoperability of disclosure frameworks.
• Examining the potential for mandatory climate-related disclosures.

Module 8: Analyzing Climate-Related Data for Supervisory Purposes

• Understanding the types of climate-related data available and their relevance for capital markets supervision for your module.
• Exploring data sources for physical risks, transition risks, and greenhouse gas emissions.
• Analyzing the challenges of data quality, availability, and comparability.
• Learning techniques for incorporating climate data into financial analysis and risk assessments.
• Examining the role of data providers and climate analytics firms.

Module 9: Scenario Analysis and Stress Testing for Climate Risks in Capital Markets

• Understanding the principles and methodologies of climate scenario analysis and stress testing for assessing the resilience of capital markets to climate risks for your module.
• Exploring different climate scenarios and their potential financial impacts.
• Learning how to design and implement climate stress tests for financial institutions and market portfolios.
• Analyzing the use of scenario analysis for informing supervisory strategies and policy decisions.
• Examining the challenges and limitations of climate scenario analysis.

Module 10: Supervising Green Bonds and Sustainable Financial Instruments

• Understanding the specific supervisory considerations for green bonds and other sustainable financial instruments to ensure their credibility and prevent greenwashing for your module.
• Analyzing the role of verification and certification processes for green bonds.
• Exploring the development of green bond standards and taxonomies.
• Understanding the supervisory approaches for monitoring and regulating the green bond market.
• Promoting transparency and integrity in sustainable finance markets.

Module 11: Engaging with Capital Market Participants on Climate Risk Management

• Developing strategies for effective communication and engagement with supervised entities on their climate risk management practices for your module.
• Understanding the challenges and opportunities faced by financial institutions in addressing climate risks.
• Providing guidance and support to facilitate the integration of climate considerations into business strategies.
• Encouraging the adoption of best practices in climate risk management and disclosure.
• Fostering a collaborative approach to building a climate-resilient financial system.

Module 12: Macroprudential Supervision of Climate-Related Financial Risks

• Understanding the potential for climate change to create systemic risks within capital markets and the broader financial system for your module.
• Exploring the role of macroprudential policies in addressing systemic climate risks.
• Analyzing the need for a system-wide perspective on climate vulnerabilities and interconnections.
• Examining potential macroprudential tools to mitigate climate-related financial instability.
• Understanding the challenges of incorporating long-term and uncertain climate risks into macroprudential frameworks.

Module 13: Integrating Climate Risks with Other Financial Risks

• Understanding the interconnectedness of climate risks with traditional financial risks (e.g., credit risk, market risk, liquidity risk) for your module.
• Analyzing how climate change can amplify existing financial vulnerabilities.
• Developing integrated risk assessment frameworks that account for the interplay between climate and other financial risks.
• Exploring the implications for capital adequacy and other prudential requirements.
• Promoting a holistic approach to risk management within supervised entities.

Module 14: Case Studies in Supervising Climate-Related Financial Risks

• Analyzing real-world examples of how different central banks and regulators are approaching the supervision of climate-related financial risks in capital markets for your module.
• Examining the specific policies, guidance, and supervisory expectations being implemented.
• Understanding the challenges faced and the lessons learned from early experiences.
• Exploring innovative approaches and best practices in climate risk supervision.
• Fostering discussion and knowledge sharing based on practical examples.

Module 15: Developing a Climate Risk Supervision Strategy for Capital Markets

• Guiding participants in developing a comprehensive and strategic approach for supervising climate-related financial risks within their respective jurisdictions for your module.
• Defining clear objectives and priorities for climate risk supervision.
• Assessing the necessary resources, expertise, and data infrastructure.
• Developing a roadmap for implementing climate risk assessment and supervision frameworks.
• Planning for continuous learning, adaptation, and international collaboration in this evolving field.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org  Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.