Central Bank of Oman warns of climate risk, Bank Al-Maghrib calls for climate “paradigm shift”, the ECB releases its annual environmental statement and more from this week in green central banking.
Oman faces extreme weather and water shortages, warns central bank
Tropical storms, floods and rising sea levels are a significant risk to the Omani financial system, the Central Bank of Oman (CBO) has warned in its latest financial stability report.
“With climate change, Oman’s low-lying urban areas along the coast will be vulnerable to flooding from the combined impact of sea-level rise and storm surges associated with extreme weather events,” the report said. It also warned of the need for “massive” structural changes to the largely oil-dependent economy as a result of the world’s transition away from fossil fuels.
Developing its capacity to assess, monitor and manage climate-related risks is a “top strategic priority”, it says, adding that the CBO is working to expand its capability to formally incorporate climate-related risks into its ongoing assessment of financial stability.
Bank Al-Maghrib calls for ‘paradigm shift’ on climate
The Bank Al-Maghrib (BAM), the central bank of Morocco, has called for a “paradigm shift” in response to the growing threats associated with climate change, focusing particularly on growing water scarcity in the north African country.
In its latest annual report, the BAM called for a “holistic” approach from government and other stakeholders to direct investment towards development of more resilient water infrastructure.
Introducing the report, BAM governor Abdellatif Jouahri called for consideration of climate requirements to be treated as a fundamental constant of all public or private action.
Jouahri also warned that the Moroccan economy may potentially be less competitive due to the proliferation of climate-related restrictions on trade, including the carbon border adjustment mechanism that the European Union will introduce at the beginning of next year.
ECB release 2022 environmental statement
The European Central Bank (ECB) has released its 2022 environmental statement, reviewing its progress in reducing the environmental impact of its in-house activities.
The ECB’s carbon emissions decreased by 10.7% between 2020 and 2021, the disclosure shows, largely as a result of a reduction inf travel during the Covid-19 pandemic. Direct emissions remained relatively stable between 2019 and 2021 due to the baseload required to maintain and operate the ECB’s buildings.
The statement covers a range of environmental initiatives undertaken by the ECB, including measures to decrease travel, conserve water and reduce waste. Other measures include a biodiversity week for all ECB staff and planting a “wildflower meadow” in the grounds of the central bank’s main building. The ECB also reduced its use of cleaning chemicals by 73% between 2020 and 2021.
The ECB has sourced 100% of the electricity from renewable sources since 2016 and offsets other greenhouse gas emissions by purchasing certified carbon credits. It aims to reduce emissions by 46% by 2030 in line with the pathway to the Paris Agreement’s 1.5ºC target.
BoE and CBE cooperate on climate response
The Bank of England (BoE) and the Central Bank of Egypt (CBE) will hold a joint three-day workshop on climate scenario analysis as part of a bilateral partnership overseeing the transition to Egypt’s presidency of Cop27.
The workshop is intended to share the BoE’s experience in understanding and managing the financial and economic effects of climate change, including lessons learned from its climate stress tests of major UK financial institutions. It will be opened by Sarah Breeden, BoE executive director for financial stability, strategy and risk and leader of the central bank’s work on climate change.
“The Bank of England is a pioneer in climate finance and has continuously provided support the CBE in building its capacity to address climate risks,” said CBE sub-governor Mai Aboul-Naga. “We look forward to our future cooperation towards developing more sustainable economies.”
Basel Committee chair reviews climate action
The chair of the Basel Committee on Banking Supervision (BCBS) has reviewed the committee’s work to mitigate climate-related risks to the global banking system, saying that climate change is the most existential challenge facing the world today.
Speaking at the International Economic Forum of the Americas, Pablo Hernández de Cos, who is also governor of the Bank of Spain, focused on global measures needed for supervision, regulation and disclosure of banks’ climate-related financial risks.
“We should be setting capital requirements based on the inherent risk profile of each asset class,” de Cos said, calling for initiatives aimed at tightening the regulatory and supervisory oversight of green taxonomies and labels. He also revealed that the BCBS is preparing work to develop “high-quality and globally consistent climate-related disclosure requirements for internationally active banks in parallel with various international initiatives”.
This page was last updated August 5, 2022
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