The Magyar Nemzeti Bank (MNB), the central bank of Hungary, published new supervisory guidance for credit institutions on the management of climate-related and environmental risks, applicable from June 2021. The new guidance calls on banks to assess the environmental risks and effects of both their own operations and their financing portfolios, using measurable and accountable metrics and methodologies aligned with the Task Force on Climate-Related Financial Disclosures’ (TCFD) recommendations.
However the guidance goes well beyond climate disclosure, asking banks to establish dedicated departments to manage environmental risks and to prepare climate neutrality plans aligned with the Paris Agreement targets. Banks are also “required” to complete a self-assessment and prepare an action plan for submission to the MNB by 30 September 2021.
The supervisory guidance was accompanied by a new knowledge base for credit institutions, and is part of the MNB’s efforts to raise climate and environmental awareness among Hungarian banks and to prepare them for potential changes to the European regulatory framework and European Banking Authority rules. However, while the MNB notes that banks are “obliged to comply with the relevant legal requirements,” so far the guidance remains voluntary.
The new “recommendation” was released at an online conference opened by Hungarian President InJános Áder and featuring senior managers of commercial banks and guest speakers from the WWF and Greenpeace. While giving a cautious welcome to the guidance, János Bálint Mező, the Executive Director of Greenpeace Hungary, made clear that this was only a first step, calling for the proposals to be made mandatory and to be applied not only to commercial banks, but also to the MNB itself.
Mező also called for an end to “fossil financing” and to activities that destroy biodiversity, and noted the unique climate and environmental responsibilities of the MNB and the banks that it regulates. “Banks, financial institutions and governments are all responsible for getting us here by financing polluting and destructive industries,” he said in a Greenpeace Hungary press release. “But they also have a key role to play in making a real green turn in Hungary and around the world.”
This page was last updated May 4, 2021
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