reporting of sustainability information. let me now turn to my second question : what needs to be done to ensure the stability of the financial system as a whole amidst climate change? strong risk management at the firm level is a necessary condition for preserving financial stability amidst climate change. but it may not be sufficient. climate - related risks are broad, but correlated. this means that they could crystalise across multiple jurisdictions and sectors simultaneously, think of the drought, heatwaves and wildfires all over europe during the course of the summer. such widespread climate events can have implications for the resilience of the broader financial system. manifestations of climate risk may give rise to abrupt increases in risk premia across a wide range of assets. this could alter asset price movements or co - movements across sectors and jurisdictions ; amplifying credit, liquidity and counterparty risks ; and raising challenges for financial risk management in ways that are hard to predict. to address both risks to individual entities and those to the system as a whole, we need actions that are both bottom - up and top - down. developing such a top - down, or system - wide, perspective faces a couple of significant challenges. the first is data gaps. firm - level disclosures are an important contribution to closing such gaps, but do not provide all the information needed to gauge climate risks and translate those into financial exposures. we need to make use of the data already available to devise simpler indicators that can help identify the build - up of vulnerabilities, and not wait until we have the perfect data set. and, considering the uncertainty about how risks from climate change will materialize, it is critical to further develop scenario analysis, making use of the common network for greening the financial system ( ngfs ) climate scenarios. a related challenge is to integrate climate risks into broader financial stability surveillance. this requires not only an understanding of climate - related vulnerabilities in different parts of the financial sector and relevant transmission channels. it also requires data and models to assess potential impacts across the system as a whole. in this regard, data repositories that provide open access to data in a consistent form should be promoted, as a public good. such information will support the provision of sustainable finance and ensure the proper functioning of the financial system. scenario analysis is a key tool for assessing financial vulnerabilities. the fsb is working jointly with the ngfs on the use of effective scenario analysis by jurisdictions and on the

this leads me to my next point – the importance of other supporting infrastructure. other supporting infrastructure for risk management and supervision to be effective and efficient, it is not sufficient to just have a sound capital framework. the second element of the committee ’ s strategy is to get the basic supporting infrastructure in place. the development of the core principles for effective banking supervision, the committee ’ s liaison with international accounting bodies, and the committee ’ s work on cross - sectoral bodies such as the joint forum are examples of our efforts to promote the fundamental infrastructure needed for a sound banking system and for effective supervision. building the foundations for effective supervision and promoting the prudence and integrity of financial accounts are an integral part of the committee ’ s current work. a sound system of accounting and provisioning underpins the integrity of risk measures, capital adequacy and meaningful market discipline. moreover, as many of you here would know too well, it is not enough to just focus our attention on the implications of our policies for banks as the traditional lines between the various financial sectors become less clear. it is therefore important to understand the implications of market developments and supervisory changes on non - bank financial institutions and financial markets more generally. supervision is not all about sophisticated modelling approaches. rather it is about understanding the risks that a bank faces and promoting better management of those risks. used appropriately, advanced modelling approaches can help a bank to refine and sharpen its ability to measure, monitor and control risk. used inappropriately however, and without an understanding of the limitations and assumptions built into such models, the costs may be greater than the benefits. in this respect, i view the infrastructure supporting the capital foundation as vitally important. an initiative that the committee will begin work on is the so - called “ definition of capital ”. over the past decade we have witnessed significant advances in the way banks manage their economic capital, as well as the development of new and innovative capital instruments. the definition of capital topic highlights the importance of the supporting legal and accounting infrastructure, and the need to understand market dynamics within and across jurisdictions. at this stage, the committee ’ s work in this area will focus on a stocktaking of the issues. proportionate policy and flexible frameworks the third element of the committee ’ s strategy is to promote proportionate policy responses, and to develop flexible policy frameworks. the committee promotes a range of supervisory methods and advocates proportionality in supervisory approaches. the supervisory tools may include better regulation, supervisory guidance, or