‘NGFS Glasgow Declaration’ by Central Banks and Supervisors

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NGFS Glasgow declaration
© Charlotte Venema

The NGFS publishes the “NGFS Glasgow Declaration” and continues to foster climate action by central banks and supervisors

Today, the NGFS released the NGFS Glasgow Declaration: Committed to Action on the occasion of the 2021 United Nations Climate Change Conference (COP26), in which NGFS members reiterate their willingness to contribute to the global response required to meet the objectives of the Paris Agreement.

To that end, they will deepen, expand and strengthen their collective efforts towards greening the financial system, to improve the resilience of the financial system to climate-related and environmental risks, and encourage the scaling up of the financing flows needed to support the transition towards a sustainable economy.

Hence, the “NGFS Glasgow Declaration” sets out several concrete commitments on what the NGFS will work on and deliver in the coming years, covering all the core activities of the central banks and supervisors community.

Frank Elderson, Chair of the NGFS and Member of the Executive Board of the European Central Bank: “We were established as a coalition of the willing. With our NGFS Glasgow Declaration, we have become a coalition of the committed. Within our mandates, we are a coalition that will deliver.”

Since its launch in 2017, the NGFS has developed and shared tools and knowledge to better equip the central banks and supervisors community, and followed-up on the six recommendations it had issued in its first comprehensive report, A call for Action, published in April 2019.

The NGFS has released various practical guides on supervisory practices, scenario-based analysis and responsible investment. As importantly, the NGFS has already published two vintages of its so-called “NGFS climate scenarios”. Finally, the NGFS has also published various reports, including a report providing concrete proposals on how central banks can integrate climate-related considerations into their monetary policy framework, and a progress report on bridging data gaps. All NGFS publications are available on the NGFS website.

As part of its contribution to the COP26, the NGFS has also recently released two new reports: a Progress report on global supervisory and central bank climate scenario exercises and a Progress report on the Guide for Supervisors and will soon release another report entitled “Climate-related litigation: Raising awareness about a growing source of risk”.

In addition, the NGFS is proud to recall that it is among the founding partners of the Climate Training Alliance, announced in July 2021 and coordinated under the Climate Finance COP26 agenda, which launches its global portal today.

Looking forward, the NGFS will amplify its collective work to facilitate and foster climate action by its members, and the broader community of central banks and supervisors.

In particular, the NGFS will soon publish guidelines on TCFD-aligned reporting for central banks, further its work to bridge climate-related gaps thanks to the finalization of its data repository, keep on conducting analytical work on how climate change might be taken into account in the conduct of monetary policy, continue to enrich its climate scenarios in the coming years, and keep exploring emerging topics – such as the impact of the loss of biodiversity – and work towards addressing them.

The NGFS is a means to an end and can only be as strong as the community supporting its work and committed to turn this work into action. On top of the “NGFS Glasgow Declaration”, many NGFS members are therefore publishing an individual pledge or strategy on the occasion of the COP26. Others have recently released documents detailing their domestic agenda, or plan to do so soon. All together, these clearly demonstrate the NGFS members’ determination to go further and take concrete actions.

These pledges and strategies show that the integration of climate-related and environmental risks into financial stability monitoring and micro-supervision is rapidly becoming a reality. Indeed, almost all the pledges and strategies encompass actions to strengthen such integration, through the use of scenario analysis – including climate stress tests – (61% of the pledges and strategies), the issuance of further supervisory expectations or guidance going very often beyond already developed practices (37% of the pledges and strategies), and/or through intellectual and capacity building within their organizations (32% of the pledges and strategies).

These pledges and strategies clearly draw the new frontier of the NGFS action: many of them encompass actions to further explore options to integrate climate-related considerations into monetary policy strategies and frameworks (47% of the pledges and strategies) or to move to more disclosures on their organizations’ activities (18% of the pledges and strategies). It also is worth noting that many NGFS members have set up or are in the process of setting up climate-dedicated units to better embed these issues within their organizations (26% of the pledges and strategies). Finally, as any other institution, many NGFS members are highly conscious of the need for their organizations to transition towards a net zero operating environment, and are setting carbon neutrality targets (47% of the pledges and strategies).

New members/observers

The NGFS is pleased to announce that Banco Central de Reserva del Perú, the Central Bank of Jordan, Banco Central de la República Dominicana, the Turkish Banking Regulation and Supervision Agency and the Jersey Financial Services Commission have recently joined the Network as members. As of today, the NGFS consists of 100 members and 16 observers.

About the NGFS

The NGFS, launched at the Paris One Planet Summit on 12 December 2017, is a group of central banks and supervisors, which on a voluntary basis are willing to share best practices and contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS brings together 100 central banks and supervisors and 16 observers. Together, they represent five continents and around 85% of global greenhouse gas emissions, and are responsible for the supervision of all of the global systemically important banks and two thirds of global systemically important insurers. The NGFS is chaired by Frank Elderson, member of the ECB’s Executive Board. The Secretariat, headed by Jean Boissinot, is provided by Banque de France.

 

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