As governments have prime responsibility for climate policy, not all but many of them all over the world are developing new regulations to transition to a low-carbon economy. Have financial institutions properly priced in all the effects of new rules and regulations? Financial institutions have significant exposures to companies that emit high levels of CO2.
Financial institutions such as pension funds and banks, are vulnerable to their carbon-intensive assets suffering a sudden loss in value. Here again, risks are already unfolding. A good example is Dutch legislation in the real estate sector.