Disclosures and taxonomies vital for climate risk understanding – RBNZ official

Central banks need increased disclosures and better taxonomies to ensure their frameworks are fit to address climate risks, a senior official at the Reserve Bank of New Zealand said on July 30.

In an op-ed, RBNZ assistant governor Simone Robbers noted climate risks were “difficult to identify, price, allocate and manage with accuracy”.

“We need new tools, like increased disclosures and better taxonomies, to give us accurate information and frameworks for action,” she said.

New Zealand was one of the first countries to introduce legislation to make climate-related disclosures mandatory for some organisations. This included insurers, banks, investment managers and non-bank deposit-takers.

Capacity building was also an area central banks were struggling with, Robbers noted. She said the RBNZ had already started to “upskill” staff but more work was needed to ensure central banks have the talent to address climate-related risks.

The RBNZ has been one of the most active central banks in addressing climate change. In 2020, it became one of the first central banks to report its verified carbon footprint.

“We are now working to develop an emissions reduction plan,” Robbers said. She added the central bank is also considering how to incorporate sustainability objectives into its balance sheet operations.