Why and how should development banks take physical climate risks into account

Climate-related financial risks fall into three main classes: physical risks associated with the consequences of climate change, transition risks resulting from the transition dynamics towards less polluting and greener economies,[1] and liability risks. Considering that these risks would pose a threat to global financial stability if they suddenly materialize, the G20 and the Financial Stability Board commissioned the Task Force on Climate-related Financial Disclosure (TCFD) to prepare a series of recommendations. These recommendations aimed to improve the uptake of these by the different players in the economy.