Weekly roundup: BdF on data gaps and Fed announces climate conference

Banque de France (BdF) releases a working paper on alternatives to perfect data, Indian banks are exposed to climate risks, the Fed announces a conference on climate change and macroeconomics, and more from this week in green central banking.

Imperfect data still useful, says BdF

Despite numerous data gaps hindering the analysis of climate-related risks by financial institutions, several alternatives are readily available and immediately useful, according to a new working paper from BdF.

Although it could take some time before high-quality, internationally comparable data are available, there is already good physical risk data while proxies, estimates and qualitative approaches can be used as alternatives, the analysis says. Open data initiatives and digital tools such as machine learning can also be useful.

Although the lack of reliable, comparable, granular and forward-looking data is a challenge to banks and other institutions assessing their climate-related risks, it is not an insurmountable task, the paper finds. “[Imperfect data] is not an unassailable obstacle stopping financial stakeholders from taking climate-related risks into consideration,” it concludes.

Indian banks unprepared for climate risks

Major Indian banks are unprepared for climate-related risks, finds a new report from thinktank Climate Risk Horizons. The analysis reviewed India’s 34 largest commercial banks against 10 criteria to assess their climate preparedness. It found that none of the banks have a net-zero target year for all emissions and only two have an exclusion policy against lending for new coal projects.

“This collective inaction is a stark reminder of potential long-term damage to the Indian economy from financial institutions that are asleep at the wheel when it comes to addressing the risks from climate change,” the report concludes. “This also underlines the need for corrective action from regulatory agencies such as the Reserve Bank of India.”

NY Fed to hold symposium on climate and the economy

The Federal Reserve Bank of New York will host a symposium on climate change and its implications for macroeconomics. The goal of the event is to “stimulate a thought-provoking debate on the topic of climate change and its implications for the macroeconomy,” and topics include monetary policy, labour and capital reallocation, trade and interest rates.

Academic panellists will explore key questions, ideas and research avenues in this important field, and will be joined by policymakers. The symposium will be held online on 13 May and is open to the public.

PBoC to develop green financial framework

The People’s Bank of China (PBoC) will support its transformation away from fossil fuels through a new financial framework, according to a senior official.

Speaking on the sidelines of the 13th National Committee of the Chinese People’s Political Consultative Conference, vice-president of the Shanghai PBoC office Jin Penghui said the bank is working on building a new transitional financial system to support Chinese national goals of reaching peak CO2 emissions by 2030 and achieving carbon neutrality by 2060. The PBoC has spared no effort in facilitating moves on carbon reduction, Jin said, and relative financial measures will continue.

Bank of Italy deputy governor says climate risks call for a new paradigm

Deputy governor of the Bank of Italy Piero Cipollone has said that central banks have an important role to play in greening the financial system. Speaking at a Università di Firenze workshop, Cipollone outlined Italian, European and international work on adapting their activities to address the climate crisis.

“Climate risks call for a change of paradigm, expanding the horizon of empirical and theoretical analysis to better understand and integrate the effects of climate change into macrofinancial models and policy tools,” he said. “Green finance is also an intellectual challenge, requiring us to add the new knowledge and information stemming from other scientific fields to our typical financial and economic background.”