Economics · Sustainable Finance

Evaluate the following statements regarding the financial risks and regulatory mechanisms introduced by climate change for the banking sector: Statement I: The financial sector regulatory frameworks categorize Transition Risk as the long-term, irreversible damage to physical assets caused by chronic climate change, such as rising average temperatures. Statement II: The practice of Greenwashing poses a significant reputational and operational risk to banks, particularly when the bank's financed projects are falsely marketed as environmentally sustainable. Statement III: The Task Force on Climate-related Financial Disclosures (TCFD) framework focuses on mandating disclosures across four thematic pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Statement IV: A Carbon Tax is a market-based mechanism that directly incentivizes a shift towards low-carbon technology by making high-carbon activities more expensive, thereby affecting the credit risk profiles of fossil fuel corporate borrowers. Which of the above statements are accurate?