Weekly roundup: FSB chair calls for global approach to climate

March 11, 2022|Written by Graham Caswell|Australian Prudential Regulation Authority, Central Bank of Ireland, Bundesbank, European Central Bank

Australia’s financial regulator conducts a climate risk survey, the FSB’s Knot on global climate standards and more from this week in green central banking.

FSB chair calls for global approach to climate

Klaas Knot, president of De Nederlandsche Bank and chair of the Financial Stability Board (FSB), has called for a global approach to ensure climate-related financial risks are adequately priced in financial contracts.

Speaking at the Eurofi High Level Seminar in Paris last month, Knot said climate change is global in its causes and implications, and affects all kinds of financial assets and contracts.

“If we want to safeguard financial stability and ensure the financing needed for the transition to net zero, it is key that climate-related financial risks are adequately priced in financial contracts,” Knot said. “This is crucial because financial contracts price the future, and that future is about to undergo fundamental change.”

Referencing the FSB’s roadmap for addressing climate-related financial risks, Knot called for improvements in disclosures, data, vulnerability analysis, and regulatory and supervisory approaches.

“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,” he said. “We should not miss it.”

Australian regulator conducts voluntary climate risk survey

The Australian Prudential Regulation Authority (Apra) has informed medium and large financial institutions about a voluntary survey it is conducting. They are being asked to assess how their current practices align with Apra’s guidance on managing climate-related financial risks.

In a letter released during unprecedented flooding in the area surrounding its Sydney headquarters, the regulator said the survey is intended to “improve both Apra’s and industry’s understanding of the approaches being taken by regulated entities to identify, assess and manage climate-related financial risks.” The survey will be presented in an online multiple-choice question format.

Apra intends to provide participating entities with “de-identified peer-comparison” results to help them understand how their approaches and practices compare to others.

Central Bank of Ireland reviews sustainability disclosures for funds

The Central Bank of Ireland (CBI) has begun a review of submissions received under a fast-track filing process to help fund managers make disclosures about environmental and sustainability risks.

According to legal advice firm Pinsent Masons, the review was initiated late last year and is intended to help fund managers comply with new rules under the EU’s taxonomy regulation. These require firms selling financial products to outline impacts on climate change mitigation, biodiversity protection and other environmental objectives.

Although the Irish government has recently introduced an ambitious climate action plan and embedded emission reduction targets in law, the CBI has been slow to recognise climate-related risks in comparison to many of its eurozone peers. Its recently released corporate social responsibility report focused largely on in-house measures, including two beehives established at its Dublin headquarters.

ECB and Bundesbank support concert for peace

The European Central Bank (ECB) and the Deutsche Bundesbank offered their support to a charity concert held last weekend to promote peace in response to the Russian invasion of Ukraine. Organised by the Berlin State Opera together with its orchestra and choir under the musical direction of Daniel Barenboim, the concert was held in aid of the United Nations’ Ukraine Humanitarian Fund. The ECB, the Bundesbank and other Eurosystem central banks have supported the charity campaign with donations.

“In this dark moment for Europe, our thoughts are with the people of Ukraine,” said ECB Christine Lagarde. “Our thoughts are with all those enduring suffering under this shocking attack,” added Bundesbank president Joachim Nagel. “It is important that we come together to show our solidarity.”

This page was last updated March 11, 2022

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