A call for action: Climate change as a source of financial risk

Climate-related risks are a source of financial risk and it therefore falls squarely within the mandates of central banks and supervisors to ensure that the financial system is resilient. With this first comprehensive report, NGFS builds upon this insight to issue six recommendations: the first four apply to the work of central banks and supervisors while the last two address policymakers. However, all six call for collective action and draw a focus to integrating and implementing previously identified needs and best practices for a smooth transition towards a low-carbon economy.

The report recommends:

• Integrating climate-related risks into financial stability monitoring and micro-supervision.
• Integrating sustainability factors into own-portfolio management.
• Bridging the data gaps.
• Building awareness and intellectual capacity and encouraging technical assistance and knowledge sharing. 
• Achieving robust and internationally consistent climate and environment-related disclosure.
• Supporting the development of a taxonomy of economic activities. 

These recommendations aim to inspire central banks and supervisors– NGFS members and non-members – to take the necessary measures to foster a greener financial system that will reduce risk.