Climate high on FSB agenda for 2022

February 18, 2022|Written by Graham Caswell|Financial Stability Board, International Sustainability Standards Board, Network for Greening the Financial System

The Financial Stability Board (FSB) has outlined its work priorities for 2022 in a formal letter from its chair, Klaas Knot, to G20 finance ministers and central bank governors meeting in Jakarta, Indonesia. Charged with protecting global financial stability, the international body will focus on climate-related disclosures, data, vulnerabilities analysis, and regulatory and supervisory approaches.

Actions to address risks to global financial stability need to take into account the particular nature of climate risk, Knot told meeting attendees. “Climate risk is global in its causes and its implications, and it is pervasive, affecting all kinds of financial assets and contracts,” he said, adding that the ultimate goal of the FSB is to ensure climate risks are properly reflected in all financial decisions.

During 2022, the FSB will support the development and widespread adoption of global baseline standards by the newly-formed International Sustainability Standards Board, as well as assisting jurisdictions and firms to implement and improve sustainability disclosures. It will strengthen its analysis of climate-related risks to financial stability and will work with the Network for Greening the Financial System to improve scenario analysis and associated financial metrics.

The board will also help develop regulatory and supervisory approaches to address climate-related financial risks, focusing on system-wide aspects and macroprudential tools.

The FSB’s priorities for the year reflect its roadmap for addressing climate-related financial risks, released last year. Aimed at coordinating the large and growing number of international initiatives underway to address the financial risks from climate change, the roadmap provides input into broader international policy discussion among the G20, G7 and IPCC.

Other priorities outlined by the FSB include work on digitalisation, non-bank financial actors, and financial market recovery from Covid-19.

In a speech yesterday, Knot also addressed governors and ministers directly. “As we all know, what gets measured, gets managed,” he said. “Because there are no international standards in place yet, not least relating to disclosures, we have an enormous opportunity to get this right from the start. We should not miss it.”

Established by the G20 in response to the 2008 financial crisis, the FSB is charged with monitoring and making recommendations about the global financial system in order to maintain financial stability. Knot is also president of De Nederlandsche Bank and a member of the European Central Bank’s governing council. He has previously been outspoken on climate and biodiversity issues.

This page was last updated February 18, 2022

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