Central banks and supervisors launch green finance group

Seven central banks and two supervisory authorities have formed a global group tasked with tackling risks related to climate change in the financial system and promoting forms of ‘green’ finance.

At the Paris summit on climate change on December 12, the authorities unveiled the new Network for Central Banks and Supervisors for Greening the Financial System, the first of its kind.

The central banks of China, France, Germany, Mexico, the Netherlands, Singapore and the UK, plus the Swedish financial services authority and French supervisory body – part of the Banque de France – became the founding members of the group.

The group says for “practical reasons” its membership was limited to begin with, but it expects the number of members to grow over time.

“The network will help to strengthen the global response required to meet the goals of the Paris agreement and to enhance the role of the financial system to manage risks and to mobilise capital for green and low-carbon investments in the broader context of environmentally sustainable development,” the members say in a statement.

The network will not be a standard-setting body in the vein of the Basel Committee, but rather a “voluntary platform” and “forum” for authorities to share best practice.

Its first actions will be a “stock-taking exercise” in 2018 and a “physical meeting” early in the new year. It is also planning to organise a conference on climate risk management and supervision, to be held in Amsterdam on April 6.

“Global challenges require global responses,” says Bank of England executive director Sarah Breeden in a statement. “The Bank’s involvement in the network builds upon its initial work in insurance, published alongside the governor’s 2015 speech at Lloyd’s of London, and the ongoing review of climate-related risks facing the UK banking sector.”

TCFD progress

In a separate announcement from the Paris talks on December 12, the Task Force on Climate Related Financial Disclosures (TCFD) said 237 companies with a combined market capitalisation of $6.3 trillion had committed to support its work.

The body was formed initially by the Financial Stability Board with the backing of FSB chairman and BoE governor Mark Carney. Michael Bloomberg now leads the effort, which seeks to mitigate climate risks through improved disclosures by firms.

The companies and organisations supporting the TCFD have more than doubled in number since its recommendations were published in June 2017.

“By this time next year, and in time for the Argentine G20 Summit, the Task Force will report on implementation experience, including examples of good practices to support and foster wider adoption,” Carney says in a statement.