NGFS: Climate-related risk should be included in the monitoring of financial stability
News The international Network for Greening the Financial System, NGFS, has recommended in a new report that supervisory authorities and central banks shall consider climate-related risk in their supervision and monitoring of the financial system. NGFS, which the Riksbank has been a member of since 2018, aims to develop and highlight best practices in environment- and climate-related risk management.
NGFS has previously established that climate-related risk is a source of financial risk. The network is now publishing a number of recommendations to help participants in the financial system contribute to the attainment of the goals set out in the Paris agreement from 2016.
“It is important that we establish global cooperation and a common approach to mitigating the risks associated with climate change. As a NGFS member, we stand behind these recommendations. They will provide support to central banks and supervisory authorities and allow them to progress in their efforts to reduce climate-related risks,” says Stefan Ingves.
In order to further the work of the financial sector on environment- and climate-related risk, NGFS calls on supervisory authorities and central banks to learn from best practices in environment- and climate-related risk management, insofar as this is part of their remit. The NGFS recommendations include supervisory authorities and central banks incorporating climate-related risk in their supervision and monitoring of financial stability. NGFS also calls on companies in the financial sector to report climate- and environment-related information in line with the recommendations laid down by the Task Force on Climate-related Financial Disclosures (TCFD).
NGFS was created in December 2017 and consists of 35 central banks and supervisory authorities from five continents. Sweden is represented in NGFS by both Finansinspektionen and the Riksbank. Finansinspektionen also has a seat on the network’s steering committee.