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Network for Greening the Financial System reports on central banks’ portfolio management and monetary policy operations & climate change

December 21,2020

Network for Greening the Financial System published a press release on its two recent reports: https://www.ngfs.net/en/communique-de-presse/us-federal-reserve-joins-ngfs-and-two-new-publications-released

(from the press release)

The NGFS today published a Progress report on the implementation of sustainable and responsible investment practices in central banks’ portfolio management” and a “Survey on monetary policy operations and climate change: key lessons for further analyses”.

Dr Sabine Mauderer, Chair of the NGFS’ “Scaling-up green finance” workstream and Executive Board member of the Deutsche Bundesbank: “Climate change is clearly moving up central banks’ agenda. Central banks are progressively integrating sustainable and responsible investment practices into their portfolio management, besides taking steps to improve their monitoring and reporting.”

According to the “Progress report on the implementation of sustainable and responsible investment practices in central banks’ portfolio management”, more central banks have taken steps to integrating Sustainable and Responsible Investment (SRI) practices in one or more of their portfolios, or are planning to do so. The progress report, which is a follow-up of the Guide released in October 2019, builds upon a dedicated survey amongst 40 NGFS members from around the globe and aims in particular at reporting on the steps central banks have taken over the last year. It highlights that awareness of reputational risks and the desire to set a good example are still considered as key motivations for the adoption of SRI by central banks. Central banks have varying SRI objectives and many are still exploring what combination of investment strategies would best align with their portfolio characteristics. Similar to last year, the report concludes with case studies of first‑hand experiences by NGFS members.

The NGFS also released the Survey on monetary policy operations and climate change: key lessons for further analyses. The NGFS is conducting a thorough and broad-based analysis of the links between climate change and monetary policy operational frameworks of central banks. This investigation builds on the Report on initial takeaways regarding monetary policy and climate change, published in June 2020. As part of this investigation, the NGFS circulated a survey among its membership to assess the degree of preparedness that central banks currently have to cater for climate-related risk in their monetary policy operations, the result of which is presented in this document: overall, it confirms an increasing and shared awareness of climate-related risks among central banks, albeit with limited concrete actions having been taken so far.

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