Financial firms in the Mena region must do more in gathering data on climate risk, suggests a report.
The London Institute of Banking & Finance (LBIF) is calling on banks and investment firms to go beyond ESG compliance and instead get hard data on their exposure to climate risk as well as their clients.
The call comes on the back of a report from the Taskforce on Climate-Related Financial Disclosure which showed that only 25% of firms in the Middle East report their exposure to climate change. This was the lowest percentage of any region and less than half that of Europe, where 60% of firms are reporting such risks.
By improving the data gathering, financial firms in the Mena region will be better able to keep pace with their global counterparts and stay ahead of local regulatory mandates, stated the LBIF.
“Now it’s about hard numbers on climate exposure, about auditable climate reporting and about a defensible climate strategy,” said Kareem Refaay, LIBF’s managing director, Mena and GCC.
The LBIF also noted the challenges involved in climate risk reporting, including the lack of data and lack of data standards as well as the need to set up the right IT systems and train staff.
“Achieving these goals will require a focus by risk management teams on the relevant figures, even if local regulators don’t demand it yet,” added Refaay.
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