"The bank’s section on climate change in the financial system review discussed both physical issues, such as extreme weather, as well as transition issues, such as sudden policy moves, being triggered by a changing climate. An issue highlighted as a particular concern is the limited understanding of climate-related risks in financial markets. The bank warns that the lack of transparency around carbon exposure – with much of it left up to companies to disclose on a voluntary basis – could lead to mispricing and ultimately increased costs of transitioning to a low-carbon economy.
"The Bank of Canada’s statements bring it in line with other central banks such as the Bank of England and the European Central Bank, which have been increasingly sounding the alarm about the need for the global financial system to properly account for, and disclose, climate risk."
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