Weekly roundup: ‘Green Flamingos’ and Danmarks Nationalbank on climate price stability

September 10, 2021|Written by GCB News|Bank of Thailand, Bank of Italy, Bank of International Settlements, Danmarks Nationalbank, Bank Negara Malaysia, Banco Central do Brasil, Bank of England, Banque de France, De Nederlandsche Bank, European Central Bank, Federal Reserve

Danish central bank on climate and price stability

Danmarks Nationalbank “shares the ECB’s assessment that climate change and the carbon transition may impact price and financial stability,” according to an analysis of changes to the European Central Bank’s (ECB) strategy published by the Danish central bank on Monday. Following a summary of the climate change component of the ECB’s new monetary policy strategy, the non-eurozone member of the European System of Central Banks found that the new ECB strategy could be positive for Denmark, increasing the economic resilience of the euro area and bringing inflation closer to target, which may­ also ­benefit ­the ­Danish­ economy.


New EU climate reporting standards

The European Financial Reporting Advisory Group (EFRAG) published a working paper with proposals on the climate-related information that EU companies will be required to disclose under new sustainability reporting standards. The “climate standard prototype” includes sections on strategy, implementation and performance measurement and is roughly aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures; disclosures on climate governance, climate risks and opportunities, targets and emissions are proposed.

The working paper builds on preparatory work carried out at the request of the European Commission and focuses only on non-financial reporting standards. However EFRAG makes clear that this is an initial document only, published for transparency purposes. It is intended as the beginning of extensive discussion towards a full draft standard which will then be open to public consultation.


Conference on macro-financial impacts of climate change

The Banca d’Italia and the Bank of England (BOE) have announced a joint research conference on ‘The macro-financial impacts of climate change and the net zero transition’. The conference, which will take place on the 19th and 20th of October, aims to “foster debate among policymakers at central banks and leading academics on the latest frontier of research.” A draft agenda includes opening remarks from Banca d’Italia Governor Ignazio Visco and BoE Governor Andrew Bailey, and panels on transition risk, physical risk, asset prices and climate-related policies. The conference will conclude with a high-level panel discussion on net zero financial policies featuring US Federal Reserve Governor Lael Brainard, De Nederlandsche Bank Governor Klaas Knot and Bank Negara MalaysiaDeputy Governor Jessica Chew Cheng Lian.


Green Flamingo: Emerging Markets Central Banks and Climate Risk

Senior central bankers from Malaysia, Hungary, Morocco, Brazil and France met Thursday to discuss emerging markets and climate risk in a panel discussion at the 2021 Climate Bonds Initiative conference. Emerging markets are already experiencing the physical effects of climate change, but tend to have different policy toolkits to respond to these risks, with more focus on currency management and bank credit guidance, and less use of quantitative easing. The panel explored these differences, highlighting the growing number of central banks from outside the OECD that are joining the Network on Greening the Financial System.

Ricardo Harris, Head of Deputy Governor’s Office at the Banco Central do Brasil, said that financing the transition to low carbon economies was the biggest challenge facing central banks in emerging markets, while Bank Negara Malaysia Deputy Governor Jessica Chew Cheng Lian called for coordinated global actions on climate change to be intensified. Climate Bonds Senior Fellow Prashant Vaze emphasised the urgency of the climate emergency. “We need to move quickly and we don’t have time to wait around for results on stress testing and disclosure,” he told the conference.


Central bank policies for an uncertain world

Bank of Thailand Governor Dr. Sethaput Suthiwartnarueput spoke about Thailand’s post-Covid recovery and climate actions in an August speech to the Stock Exchange of Thailand, published by the Bank for International Settlements (BIS) on Thursday. Titled ‘Central bank policies for an uncertain world’, his talk reviewed the growth of the Thai ESG bond market and ongoing work on responsible lending guidelines, improved climate-related disclosure and the development of a green taxonomy.

“Thailand has been lagging in our response in terms of the climate crisis and as a country that is likely to be hit very hard by the climate crisis,” Suthiwartnarueput said, promising that the Bank of Thailand would “do our best to make sure that the banking sector catches up and does play its role [in mitigating climate change].”


Latin American central banks failing on climate

Latin America’s central banks have yet to apply climate-related guidelines to credit institutions and are far from alignment with the Paris Agreement targets and pathways, wrote Emilio Godoy for the Interpress Agency on Friday. Godoy wrote a comprehensive article in which he reviews the state of green policies among central banks in Central and South America. “Only the Central Bank of Brazil has made some progress,” Godoy says, referencing 2014 regulations on risk management and socio-environmental responsibility. But even the Central Bank of Brazil has yet to create a comprehensive set of climate-related credit guidance rules and the entire Latin American banking and financial system continues to provide funds to the fossil fuel sector.

“We have only seen some promises and agreements, but for 2022 or later,” says 350.org Latin America Director Ilan Zugman. “There are no timelines, clear goals or transparency that would enable us to monitor this. There are many mechanisms that need to be improved.”

This page was last updated September 10, 2021

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