BIS: Sabine Mauderer: Scaling up green finance - the role of central banks
17 June 2019
Speech by Dr Sabine Mauderer, Member of the Executive Board of the Deutsche Bundesbank (DB), in which she focuses on the Green Finance activities of the international Central Banks and Supervisors Network on Greening the Financial System (NGFS), Bundesbank's activities on Green Finance and current German political initiatives on Green Finance.
The key message of NGFS‘s network: Central banks all over the world acknowledge that climate change is a source of financial risks. Therefore, green finance is a field of work for central banks and the whole financial sector. Combating climate change and preserving the environment: this is no longer a hobby-horse of eco-activists, but a key factor for economic and financial systems.
In NGFS‘s first comprehensive report, NGFS put forward six practical recommendations:
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Integrating climate-related risks into financial stability monitoring and micro-supervision. This includes assessing climate-related risks in the financial system and integrating them into prudential supervision.
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Integrating sustainability factors into own portfolio management. The NGFS encourages central banks to lead by example in their own operations.
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Bridging data gaps. Public authorities are asked to share data relevant to Climate Risk Assessment and make these data publicly available.
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Building awareness and intellectual capacity and encouraging technical assistance and knowledge-sharing. The NGFS encourages all financial institutions to build in-house capacity and to collaborate to improve their understanding of how climate-related factors translate into financial risks and opportunities.
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Achieving robust and internationally consistent climate and environment-related disclosure. Investors need to know about the climate risks in their investments.
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And supporting the development of a taxonomy of economic activities. A taxonomy makes investing green easier and prevents "green washing". It creates more market transparency on which activities are really green and which are not.
The NGFS is tackling these challenges in three workstreams: on banking supervision, on macrofinancial supervision and on scaling up green finance.
Regarding Bundesbank's activities Sabine says: “Besides the investments, the Bundesbank is closely looking at the risks resulting from climate change. We look at individual risks in our banking supervision and at systemic risks in our supervision of financial stability. We are making the case for individual financial institutions to disclose their climate-related financial risks and look at these risks in banking regulation and supervision. Regarding financial stability, we evaluate whether the financial system as a whole is able to deal with asset devaluations resulting from physical climate risks or from transformation risks following political decisions to address climate change, for example on energy policies.”
Government - in February, the State Secretaries' Committee for Sustainable Development declared that Germany should become a leading hub for sustainable finance. Chancellor Merkel reaffirmed this aspiration just a few weeks ago.
Full speech
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