Taiwan’s banks are to undergo mandatory climate-change stress tests for the first time next year to measure the impact of a range of possible environmental catastrophes on the lenders’ assets.
The tests’ content would be finalized before the end of this year, Banking Bureau Deputy Director-General Roger Lin (林志吉) said in an interview on Tuesday.
The Financial Supervisory Commission plans to conduct the tests in the first half of next year with the results to be published in June.
Photo: Kelson Wang, Taipei Times
The commission has authorized Taiwan’s banking association to develop the tests, which it is to receive for approval by the end of September.
Some institutions, including CTBC Financial Holding Co (中信金控), Fubon Financial Holding Co (富邦金控) and Cathay Financial Holding Co (國泰金控), have already begun to prepare, examining the risks to real-estate assets of rising sea levels or to loan portfolios exposed to industries especially vulnerable to climate change, statements on their Web sites say.
Climate change and government policies aimed at mitigating it are growing priorities for financial authorities around the world.
The Bank of England last month warned that British banks and insurers could see climate-related losses of as much as ￡334 billion (US$419 billion) over the next three decades following the central bank’s first-ever stress tests.
Not everyone agrees.
Stuart Kirk, the head of responsible investing at HSBC Holdings PLC’s asset management unit, criticized environmental “hyperbole” at an event hosted by the Financial Times last month, saying that climate change is not a financial risk worth worrying about.
His comments have since been widely condemned, and HSBC has suspended him.
Taiwan stands to be particularly hard hit by unmitigated climate change. Higher temperatures portend stronger typhoons and more severe droughts, the Ministry of Science and Technology said in March.
They could also threaten as much as 20 percent of the rice harvest and encourage the breeding of yellow fever mosquitoes, which can spread Zika, dengue fever and other diseases.
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