Weekly roundup: biodiversity, climate finance and a new Bundesbank president

December 3, 2021|Written by Graham Caswell|Office of the Superintendent of Financial Institutions, Te Pūtea Matua / Reserve Bank of New Zealand, Bank of International Settlements, Bank of Japan, Bundesbank, Federal Reserve

Biodiversity-related disclosures, Kuroda on climate finance, mindset shifts and humility, a new Bundesbank president and more in this week’s roundup of the news in green central banking.

New guidance for biodiversity-related disclosures

The Carbon Disclosure Standards Board (CDSB) has launched application guidance for biodiversity-related disclosures. Recognising that biodiversity plays a vital underpinning role in supporting human life, the new guidance forms part of the CDSB Framework on reporting material environmental information in mainstream reports to investors. It aims to extend the recommendations of the Taskforce on Climate-related Financial Disclosures to nature and includes reporting advice on governance, environmental policies, risks and opportunities and environmental impacts.

BoJ governor’s crucial elements of climate finance

Speaking at the Paris Europlace International Financial Forum in Tokyo on Monday, Bank of Japan governor Haruhiko Kuroda outlined the elements he considers necessary to achieve and promote sustainable finance.

Scenario analysis is key to making the financial system more resilient against climate-related risks, Kuroda said, calling on financial resources to be mobilised for a smooth transition to net zero. He also called climate-related financial disclosures “crucial” for markets to function efficiently.

“It is essential that all constituents of society take responsible action to address climate change,” Koruda concluded. He also emphasised that action to reduce emissions should not be considered as a cost or a constraint on economic growth, but instead as a stimulant to innovation, new industries and employment

Canadian banking regulator joins NGFS

Canada’s federal regulator of financial institutions has joined the Network for Greening the Financial System, bringing membership of the international body to 102 central banks and supervisors.

The Office of the Superintendent of Financial Institutions, an independent agency charged with protecting depositors, policyholders, financial institution creditors and pension plan members, said that NGFS membership is part of accelerating its actions to address climate-related risks.

“Climate change is the challenge of our generation,” said superintendent Peter Routledge. “It demands all of us to address its threats with a greater sense of urgency, vigour and effort commensurate with the risk.”

Central banks as climate warriors

Big central banks are becoming climate warriors, according to a Washington Post article examining the response of monetary and financial policy makers to climate-related risks to the global economy.

Referencing a growing body of evidence that climate change poses a threat to both price and financial stability, the article reviews the recent actions of major central banks to mitigate that threat. While other central banks introduce preferential green lending, conduct stress tests and decarbonise their asset purchases, the article concludes that “the US Federal Reserve has been a notable laggard”.

Climate change requires mindset shifts and humility

The mindset shifts necessary for climate change adaptation and transition will require us all to be courageous but to also be humble, said the assistant governor of Te Pūtea Matua, the Reserve Bank of New Zealand (RBNZ).

“We don’t know what we don’t know, we need others to help, and we need to think in much longer time horizons than ever before,” Simone Robbers said in an article published on the Good Returns financial services website. There is little downside in being prepared for potential climate challenges, she said, branding denial, avoidance or delay as irresponsible.

“We are all working together as fast as we can to understand what needs to change in the way we think about risk, financial stability, the way we regulate, and the way we operate our businesses here in New Zealand.”

Joachim Nagel for Bundesbank president?

Citing an anonymous inside source, the Financial Times has reported that incoming German chancellor Olaf Scholz is likely to nominate Joachim Nagel to replace outgoing Jens Weidmann as Bundesbank president.

Nagel has spent much of his career at the Bundesbank before joining the Bank for International Settlements last year as deputy head of its banking unit. He has also served on the executive board of the German state-owned development bank KfW, where he focused on sustainable finance and climate change mitigation.

This page was last updated December 3, 2021

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