Climate risk regulation in Africa’s financial sector and related private sector initiatives

Getting Africa’s financial sector ready to cope with climate risk is vital for a smooth transition to net-zero emissions and resilience, according to a new report by three global institutions. The report was launched by the African Financial Alliance on Climate Change (AFAC) at the COP26 climate conference. The report is titled “Climate risk regulation in Africa’s financial industry and related private sector initiatives.” It is a joint publication by the African Development Bank, the Global Center on Adaptation, and the UN Environment Finance Initiative. It proposes action areas that will enable Africa’s financial industry to implement global best practices on environmental, social and governance integration, climate-risk disclosure and green finance. The study assesses the state of climate risk integration in prudential, financial, regulatory, and supervisory frameworks. It also identifies potential levers to stimulate deeper outreach and adoption of climate risk regulations in the financial system, especially in countries that are in the early stages of the process of integrating climate risk regulations in the financial sector.