The Riksbank actively participates in several international forums where measures to point out, manage and counteract climate-related financial risks are increasingly being addressed. International cooperation is important for the national work described above, but also because an effective response to the challenges posed by climate change requires action at a global level.
The Riksbank has been a member of the NGFS since 2018. This is a group of central banks and financial supervisory authorities who cooperated by develop the analysis of environment and climate risk management in the financial sector. Over the past year, the Riksbank has participated actively in the work of the NGFS, which deals partly with climate considerations in the implementation of monetary policy and partly with central bank reporting of climate-related risks. Together with Finansinspektionen, the Riksbank has also published a commitment to continue integrating climate-related risks into its activities and analysing how climate-related risks can affect the financial system and its stability. See Joint pledge from the Swedish members of the NGFS, Finansinspektionen and Sveriges Riksbank, at the occasion of the NGFS Glasgow Declaration during COP26. The purpose of this commitment is to contribute to the global efforts presented by the NGFS in the Glasgow Declaration at the COP26 climate summit. With this, the NGFS wishes to demonstrate how it can contribute to meeting the goals of the Paris Agreement.
In 2019, the Basel Committee formed the Task Force on Climate-Related Financial Risks (TFCR), in which the Riksbank participates. The Basel Committee on Banking Supervision (Basel Committee) develops global standards, guidelines and recommendations for the supervision and regulation of banks. The Basel Committee’s standards are introduced by the national legislative systems of the members. For Sweden, this takes place under the framework of the EU. The TFCR works to promote the Committee’s mandate to strengthen the regulation and supervision of banks worldwide and to ensure that the banks are better prepared to manage risks related to climate change. The TFCR is now analysing the extent to which climate-related financial risks can be managed under the Basel regulatory framework, identifying potential gaps in the current framework and considering possible measures to address any gaps identified. The current work includes regulation, supervision and reporting, in which the Riksbank is involved in leading the regulatory group.
In addition, the Riksbank has been involved in the work of the European Systemic Risk Board (ESRB) on climate risk monitoring and has contributed, among other things, to the group that carried out stress tests with climate scenarios at banks and financial institutions.
Within the European Banking Authority (EBA), the Riksbank participates in the Sustainable finance network. In addition, the Riksbank participates in the group working with transparency that aims, among other things, to produce harmonised climate data with which EU banks must comply. Since the Capital Adequacy Directive requires banks to provide information on climate risks from June 2022, this group is working on the development of harmonised reporting templates so that banks report in a comparable way.
The climate issue also arises in the Economic and Financial Committee (EFC), which has discussed the Commission’s proposed strategy for sustainable finance.
The Riksbank, together with the Ministry of Finance, represents Sweden in the IMF. Sweden and the Nordic-Baltic constituency have long been pushing the IMF to include climate issues in its work within the framework of its macroeconomic mandate. This view has gained increasing support and work is now under way within the IMF to increase the level of ambition in the climate field. In October, the IMF’s International Monetary and Financial Committee, the IMFC, supported the establishment of a fund at the IMF for longer-term lending than traditional IMF loans, with the aim of helping countries meet long-term structural challenges. The macroeconomic aspects of climate transition are expected to be a key objective of the fund. The design of the fund will be discussed at the beginning of 2022 and the Riksbank will participate actively in this work.
The Financial Stability Board (FSB) coordinates international initiatives to analyse and address the financial risks arising from climate change and published a plan on this theme this summer. See FSB roadmap for addressing climate-related financial risks. The Riksbank is not a member of the FSB but is a member of its consultation group for Europe and is therefore following the work of the FSB on this matter.