Environment-related financial risks and regulatory capital requirements

Environment-related financial risks and regulatory capital requirements

INSPIRE and the UNDP-hosted Sustainable Insurance Forum (SIF), a NGFS Observer, have partnered to support prudential regulators and supervisors’ understanding of how environment and climate risks can be integrated into capital frameworks.

The purpose of this call is to commission gold standard research and policy analysis which (i) monitor the latest developments on these risks’ application to the banking and insurance sectors and (ii) contribute to the academic literature that provides central banks and supervisors with the evidence base for regulatory action on

Key topics that proposals can address include, but are not limited to:

  • The analytical evidence base on the exposure to and materiality of environment and climate risks to provide a foundation for adjustment of prudential frameworks
  • The extent to which environmental risks are captured, wholly or in part, by current regulatory frameworks, building on and globally expanding upon the existing work in the EU and UK
  • The use of regulatory capital as a tool to ensure firms’ alignment with supervisory expectations related to environmental risks, including governance and risk management responses
  • Adjustment of regulatory capital frameworks to integrate environmental risks and the legal framework implications in different jurisdictions
  • Identification of the most relevant environment, and especially, climate risk transmission channels that will need to be taken into account for regulatory capital frameworks
  • The use of system-wide capital buffers to address environmental risks
  • Quantification of risks related to underwriting, lending, and investing to either high-carbon sectors or high-emitting jurisdictions to reflect climate-driven changes in risk profiles
  • Adjustments to the wider prudential regime, outside of the capital framework, to enhance the supervision and risk management of environment- and climate-related risks
  • Incorporation of insurance-specific climate risks in supervisory frameworks

In this targeted call, INSPIRE aims to support several projects with an individual budget of approximately $30,000 to $50,000.

The submission period will span 4 weeks and ends on Wednesday, 20 July 2022, 23:59 GMT.

Find the full details of the call and submission guidance available in the downloads.

FAQ are provided below.

Should you have any additional questions please contact INSPIRE via INSPIRE@climateworks.org.

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Step 1 of 6 - Research team

This person will be the primary contact for your research project. Include first name(s), last name, institutional affiliation(s), job title(s)
This person will be the primary contact for your research project.
Enter details of all members of your research team (excluding lead contact). Include the first name(s), last name, institutional affiliation(s), job title(s) and emails. If this does not apply to your project, please write N/A.

General FAQ

Who can submit proposals?
We accept proposals from all institutions conducting research, including academic-scholarship, nonprofit organisations, non-government organisations, and international financial and monetary institutions. We recommend research that is conducted in partnership with financial institutions and can work in cooperation between multiple organisations. We welcome research oriented around emerging economies and/or the global south. Women and minorities are encouraged to apply.
Do you accept proposals from commercial entities?
We don’t preclude commercial entities from participating. However, the full availability of the findings is key.
What is the size of your commissions?
Our commissions normally range from 10,000 - 50,000 US$.
Who can I contact if my question is not addressed here?
If you have further questions, please send these to inspire@climateworks.org.