UK pension schemes should not ignore climate change, a senior executive at The Pensions Regulator said on Monday, the first watchdog to weigh in after a top HSBC banker was suspended after playing down the financial risks of climate change.
Regulators across the world have been putting pressure on the financial services industry to take climate change into account when calculating risks to their business models.
Stuart Kirk, a senior HSBC banker in charge of sustainable investments, had said at an industry event last week that central bank policymakers and other global authorities were exaggerating the financial risks of climate change. read more
The bank has since suspended him pending an internal investigation, sources familiar with the matter told Reuters on Monday.
Policymakers are increasingly confronting a new problem, though: the entry of technology companies into financial services throws their trade-off framework off-kilter. There are two issues.
First, financial regulators don’t have jurisdiction over technology companies. They have jurisdiction over their financial activities but not over the companies themselves. At the entry level, this works fine. When a company wants to do payments, they need to get a payments license and when they want to do credit underwriting, they need a credit license.
Sometimes, new entrants skate round these rules. Afterpay in Australia is not regulated as a credit provider since it doesn’t impose a charge for the ability to pay; nor as a payment system since it conducts relationships bilaterally between consumers on the one hand and merchants on the other. In response to impending regulatory scrutiny, the company points out that the major card providers got away with it for 20 years. “The dominant international card payment systems…were launched in Australia in 1984 and were not subject to RBA [Reserve Bank of Australia] regulation until 2004.”