Banks Should Face Individual Climate-Capital Demands, BIS Says

Imposing individual capital requirements on banks -- rather than industrywide demands -- is the best way for now to ensure the sector doesn’t buckle under the weight of challenges posed by climate change, according to researchers at the organization that helps set global banking standards.

In a working paper, experts at the Bank for International Settlements said rules guiding how much capital banks must have to absorb losses need to be adjusted to include climate risk. But the BIS experts rejected -- for now, at least -- adding a capital buffer to industrywide requirements, known as Pillar 1.

The recommendations ...