Mountain Range in British Columbia`
fremme/123RF

A collection of central bankers is calling on policymakers and the world’s bankers to take action on climate-driven financial risks.

The Network for Greening the Financial System (NGFS), which was launched at a summit in Paris in 2017, issued its first report today, demanding that policymakers take action to address environmental risks that also represent financial risks.

The report sets out four recommendations for central banks and other regulators, calling on them to integrate climate-related risks into financial stability monitoring and supervision; incorporate sustainability factors into their own portfolio management efforts; enhance data collection; and build their capacities to analyze the effects of climate on financial risks and opportunities.

The NGFS also recommends that policymakers agree on robust, consistent environmental disclosure standards.

“The financial risks we face through climate change are analytically difficult, unprecedented and yet very urgent,” said Frank Elderson, chairman of the NGFS. “By issuing these recommendations, the NGFS members demonstrate collective leadership which will result in action to foster a greener financial system across countries and continents.”

He added, “As long as the temperatures and sea levels continue to rise and with them the climate-related financial risks, central banks, supervisors and financial institutions will continue to raise the bar to address these risks and to green the financial system.”

Alongside the release of today’s report, the Bank of England announced that it will start disclosing how financial risks from climate change are managed at the central bank.

“We need to lead by example, and by providing such disclosures, we will be playing our part to secure the transition to a sustainable financial system,” said Mark Carney, governor of Bank of England.

Earlier this year, the Bank of Canada joined the NGFS, which now has 36 members and six observers.