The Network for Greening the Financial System (NGFS) acknowledges that climate-related and environmental risks are a source of financial risks and that central banks and supervisors should therefore ensure that the financial system is resilient to these risks. In its first comprehensive report “A Call for Action”, the NGFS recommended the integration of climate-related risks into micro-prudential supervision.
Following up on this, and based on supervisors’ current practices, this guide sets out five recommendations for members of the NGFS as well as the broader community of banking and insurance supervisors to integrate climate related and environmental risks into their work. Its aim is to offer supervisors the inspiration needed to accelerate their own efforts in this area, while giving them the flexibility to accommodate their own specific needs, tailor actions to their mandates and make progress at their own pace.
The content of the guide is based on input received from NGFS members and work done by supervisors outside the network. The outcomes clearly show that worldwide supervisors are taking action: They are building their expertise and allocating resources, undertaking climate-related and environmental risk analyses of their financial institutions and are publishing documents to clarifying to financial institutions what is expected of them regarding climate-related and environmental risks. The practices showcased in the guide aim to further inspire supervisors and help them accelerate their efforts.