(Finance) – The increase in investor awareness on the impact of climate change and the growing demand for products that comply with environmental, social and governance (ESG) criteria “is favoring reallocation of the portfolios of banks, funds and insurance companies to investments classified as sustainable. In 2021, the collection of mutual funds managed by Italian intermediaries oriented towards sectors that promote ESG investments amounted to 34 billion; the assets of these funds reached 158 billion, almost a quarter of the total assets. ”He said this Luigi Federico Signorini, general manager of the Bank of Italy and president of IVASSin an event of the Italian Financial Industry Risk Managers (AIFIRM).
“In the absence of a sufficient supply of fundable projects, the increase in demand from investors it could lead to overvaluation phenomena, followed by sudden price corrections of the activities – however, Signorini warned – Furthermore, in the absence of adequate transparency criteria for issuers, market risk is accompanied by a potential reputational risk deriving from the phenomenon of greenwashingor rather the circumstance by which intermediaries finance activities whose sustainability characteristics are only apparent “.
The Bank of Italy DG underlined that the Availability of adequate data is also essential for assessing the climate risks of financial institutions and for conducting stress tests. “The data necessary for this purpose are many and varied – he explained – For example, to assess the risk of transition it is necessary to have information on greenhouse gas emissions related to economic activities that are sufficiently detailed, updated and comparable between countries. with reference to physical risk, information is needed on exposure to natural disasters with adequate territorial granularity, and possibly such as to take into account the possible evolution of climate change and its geographically differentiated effects. To conduct scenario analyzes and stress tests, robust and detailed data on the exposure of intermediaries to various climatic risks, as well as information on the transfer of such risks within the financial system“.
“The information available so far is insufficientand to fill this gap, coordination and cooperation between the authorities at the international level are necessary “, warned Signorini, underlining that” the availability of reliable quantitative information is a sine qua non for guiding decisions “.