The Green Central Banking Scorecard, produced by Positive Money and Green Central Banking, scores and ranks the full range of green policies and initiatives adopted by G20 central banks. The analysis is based on a literature review, expert consultations, and bilateral interactions with central bankers and supervisors.
Key developments since the previous edition include:
While some central banks have made progress, none are responding in any meaningful way to the radical uncertainty climate and ecological crisis brings. Even the highest scorers failed to rise above a C grade.
France claimed the top spot, largely due to the Banque de France’s responsible investment charter, which includes a phased withdrawal from fossil fuel investments.
China slipped from first place due to credit guidance favouring domestic coal production. However, PBoC’s recent credit guidance on limiting overseas coal investments is acknowledged, and keeps China at number three.
The position of the EU improved slightly, overtaking the UK, thanks to the European Central Bank’s climate action plan, and consideration of climate capital rules and bank portfolio restrictions. These moves also benefited France, as well as Italy and Germany.
Despite some action on addressing climate risk, a lack of significant policy changes from the Federal Reserve means the US slid down to joint 14th place.
This edition was published in October 2021.
Rank
Country
Aggregate Score(out of 130)
Grade(A+ to F)
Research and Advocacy(out of 10)
Monetary Policy(out of 50)
Financial Policy(out of 50)
Leading by Example(out of 20)
1
France
52
C
10
8
26
8
Central Bank/Supervisor
Banque de France, Autorité de Controle Prudentiel, European Central Bank, European Banking Authority
Banks are required to integrate climate and environmental risks into risk management practices
ECB conducted an economy-wide climate stress test (results available here)
Microprudential climate-related capital-based measures (under discussion at ECB and EBA)
Macroprudential climate-related capital-based measures (under discussion at ECB and EBA)
Requirement for banks to publish Paris-compatible transition plans (under discussion at ECB)
Low-impact
ACPR issued a guide on good practices in the governance and management of climate-related financial risks by French banking institutions
ACPR conducted a climate stress test on the main French banking and insurance groups (results published here – downgraded from medium impact as it was a voluntary pilot that resulted in no new regulation)
EBA launched a consultation to incorporate ESG risks into the governance, risk management and supervision of credit institutions and investment firms
EBA ran a consultation on Pillar 3 disclosures of ESG risks
ECB ran a public consultation on its guide on climate and environmental risks
Mandatory carbon reporting specifically for French institutional investors
ECB will develop new statistical indicators to assess the carbon footprint of banks, as well as their exposures to climate-related physical risks (formal commitment)
ECB will review how credit ratings reflect climate risk (formal commitment)
Campos Neto 2020 presentation on the Brazilian Economic Outlook and Agenda BC#
Monetary Policy
18 out of 50
High-impact
N/A
Medium-impact
Ban on financing for sugar cane crop expansion in the Amazon, Pantanal and other zones
Condition on rural credit in the Amazon whereby borrowers must show proof of environmental compliance (study on impact on deforestation – criteria have recently been expanded and strenghtened)
‘Green Liquidity Facility’ (formal commitment – latest BCB report refers to this as the ‘sustainable financial liquidity facility’)
‘Green Bureau of Rural Credit’ and incentives for green rural credit (formal commitment – latest BCB report refers to this as the ‘Sustainable Rural Credit Bureau’)
Low-impact
Sustainability criteria in the management of international reserves and monitoring of CO2 emissions to assess portfolio’s carbon profile
Public consultation on sustainability criteria applicable to rural credit operations
Financial Policy
19 out of 50
High-impact
N/A
Medium-impact
Financial institutions are required to disclose social, environmental and climate risks
Financial institutions are required to implement a Policy for Socio-Environmental Responsibility (PRSA) “consisting of a set of principles and guidelines involving social, environmental and climate related aspects that orientate business conduct, company activities and relations with stakeholders” (updated regulation including ‘climate’ available here)
Financial institutions are required to incorporate socio-environmental risks into their risk management and governance structures (updated regulation including climate risks available here)
Inclusion of climate risk scenarios in new and improved system-wide stress tests (formal commitment)
Low-impact
Creation of new indicators to monitor social, environmental, and climate risk (formal commitment)
Public consultation on regulation on risk management and social, environmental and climate responsibility
Banks must offer reduced interest rates for loans to pollution control facilities, environmental protection and infrastructure, renewable energy, etc (referred to here)
Interest rate provided to banks on required reserves may be increased if the bank is assessed to be greener in the PBoC’s macroprudential assessments (referred to here)
Low-impact
PBoC issued Notice on Issues Relating to Improving Environmental Protection in Credit Policy, which provided guidance for banks on “how to better include environmental variables in credit decisions” (referred to here)
PBoC is increasing the allocation of green bonds in the country’s foreign exchange reserves
Financial Policy
23 out of 50
High-impact
N/A
Medium-impact
Banks are required to incorporate environmental risks into risk management and governance processes (see, for example, 2012 Notice on Issuing Green Credit Guidelines, referred to here)
Banks are required to shift lending towards environmentally friendly projects (see, for example, 2007 “Opinions on Implementing Environmental Protection Policies and Rules and Preventing Credit Risks” and the 2012 “Notice on Green Credit Guidelines” referred to here)
Banks are required to shift lending away from unsustainable projects (see, for example, 2007 “Opinions on Implementing Environmental Protection Policies and Rules and Preventing Credit Risks” and the 2012 “Notice on Green Credit Guidelines” referred to here – points temporarily suspended due to China’s current domestic credit guidance towards coal production)
Mandatory climate risk disclosure for all financial firms (formal commitment – referred to here)
Lower risk weights for green assets (under discussion – referred to here)
Low-impact
CBRC issued Opinions on Energy Efficiency and Emission Reductions in Credit Extension, which provided “specific guidance on how banks can contribute to national environmental goals” (referred to here)
CBRC’s Notice of Submission of Green Credit Statistics requires that the 21 main banks report green credit statistics (referred to here)
CBRC Notice of the Key Performance Indicators of Green Credit Implementation, which established “quantitative and qualitative indicators for assessing performance” (referred to here)
CBIRC issued guidelines on incorporating ESG requirements into the entire credit granting process (referred to here)
CBIRC is encouraging banks to set up green finance divisions and branches and develop green financial products (referred to here)
CBIRC issued guidelines on ESG-related information disclosure, reporting and interaction with stakeholders (referred to here)
CBIRC issued guidelines on environmental risk management systems (referred to here)
Inclusion of green bonds in the Green Finance Evaluation Plan, which will assess the share of green bonds in financial institutions’ total assets
PBoC has said it will “not build coal-fired power plants abroad” (as the statement was vague and details are yet to be provided, this is a ‘low impact’ policy)
Leading by Example
0 out of 20
High-impact
N/A
Medium-impact
N/A
Low-impact
PBoC, CSRC, NDRC announced updated green bond guidelines which exclude ‘clean coal’ (referred to here), but the Green Industry Guidance Catalogue still includes ‘clean utilisation of coal’
PBoC is also working with Europe on a joint taxonomy (referred to here)
Banks are required to integrate climate and environmental risks into risk management practices
Economy-wide climate stress test (results available here)
Microprudential climate-related capital-based measures (under discussion at ECB and EBA)
Macroprudential climate-related capital-based measures (under discussion at ECB and EBA)
Requirement for banks to publish Paris-compatible transition plans (under discussion at ECB)
Low-impact
EBA ran a consultation to incorporate ESG risks into the governance, risk management and supervision of credit institutions and investment firms
EBA ran a consultation on Pillar 3 disclosure of ESG risks
ECB ran a public consultation on its guide on climate and environmental risks
ECB will develop new statistical indicators to assess the carbon footprint of banks, as well as their exposures to climate-related physical risks (formal commitment)
ECB will review how credit ratings reflect climate risk (formal commitment)
Leading by Example
6 out of 20
High-impact
N/A
Medium-impact
N/A
Low-impact
Contributed to development of the EU taxonomy
Runs ECB Listens event which allows civil society to raise environment-related questions
Sustainable and responsible investment practices in the management of their non-monetary portfolios (referred to here)
Mandatory TCFD disclosure for banks and insurers and commitment to sustainability disclosure requirements (SDRs)
Requirement for all firms to disclose transition plans (formal commitment as part of SDRs: “As standards for transition plans emerge, the government and regulators will look to incorporate these into UK regulation”)
Financial institutions are required to integrate climate risk into their risk management practices
Banks are required to integrate climate and environmental risks into risk management practices
Economy-wide climate stress test (results available here)
Microprudential climate-related capital-based measures (under discussion at ECB and EBA)
Macroprudential climate-related capital-based measures (under discussion at ECB and EBA)
Requirement for banks to publish Paris-compatible transition plans (under discussion at ECB)
Low-impact
EBA launched a consultation to incorporate ESG risks into the governance, risk management and supervision of credit institutions and investment firms
EBA ran a consultation on pillar 3 disclosure of ESG risks
ECB ran a public consultation on its guide on climate and environmental risks
ECB will develop new statistical indicators to assess the carbon footprint of banks, as well as their exposures to climate-related physical risks (formal commitment)
ECB will review how credit ratings reflect climate risk (formal commitment)
France
Brazil
China
European Union
United Kingdom
Italy