Central Banks and Climate-related Disclosures

With a growing number of central banks applying the recommendations issued by the Taskforce on Climate-related Financial Disclosures (TCFD) to their own portfolios, this paper suggests how such disclosures can be improved.

It is part of a toolbox developed by the Inspire research network to support central bankers and financial supervisors in calibrating monetary, prudential and other instruments in accordance with sustainability goals.

The Banco Central do Brasil, Bank of England and Banque de France are among those central banks already making TCFD-aligned disclosures. The Network for Greening the Financial System, which is made up of over 100 central banks and supervisors, published guidelines for its members last year.

The paper outlines multiple benefits from central banks making such disclosures, including the positive example it sets for other actors in the financial system, and the useful experience it gives central banks in guiding the institutions they supervise.

It sets out some considerations for central banks, specifically as they develop their TCFD disclosures, arguing that they have some distinctive features relative to other institutions. The recommendations include:

• central banks should apply the recommendations in a tailored manner, based on their own mandates and financial and operational frameworks to address the most relevant and material areas of their work;
• central banks should progressively increase the breadth and granularity of the information disclosed, recognising that data and methodologies will improve over time;
• central banks should identify the data and methodology gaps for providing disclosures and design and implement a plan to address them;
• the disclosures should be accessible beyond the central bank and published with regular frequency. For example, they should be included in annual reports, in a dedicated public report or on the central bank’s website.

The authors say the recommendations in the paper can be applied across central banks’ work, including to their monetary and non-monetary portfolios and credit facilities, as well as their financial stability and physical operations.

The report also says central banks should coordinate to support disclosures around other environmental issues, for example consistent with the Taskforce for Nature-related Disclosures.