Latvijas Banka joins global central bank network for addressing climate challenges

  • 2020-03-13
  • LB/TBT Staff

Latvijas Banka has joined the global Network of Central Banks and Supervisors for Greening the Financial System (Network for Greening the Financial System; NGFS).

The aim of the NGFS is to analyse the effects of the climate change on the financial sector and the ways how decisions made by the sector can support the implementation of greening policies, including a transition to an environment-friendly low carbon economy.

This international network was established in December 2017 and involves central banks and financial sector supervisors from 59 countries, including 20 EU member states, as well as the European Central Bank; 12 international organisations as observers, e.g. the Bank for International Settlements, European Investment Bank, International Monetary Fund, Organisation for Economic Cooperation and Development, and the World Bank (for a full list of members, see: https://www.ngfs.net/en/about-us/membership).

Having compiled and analysed the experience and best practices of various institutions, the NGFS develops recommendations and guidelines that help to identify and understand the potential risks caused by the climate change; improve management of the related risks in the financial sector, as well as mobilise funding to support transition to green or environment-friendly low carbon economy. For example, the NGFS has published a sustainable and responsible investment guide for central banks' asset managers (https://www.ngfs.net/sites/default/files/medias/documents/ngfs-a-sustainable-and-responsible-investment-guide.pdf) and a comprehensive report on the required action in the financial sector to better address unfavourable climate changes (https://www.ngfs.net/en/first-comprehensive-report-call-action).

According to the research by Munich RE, a global reinsurance company, in 2019 the world faced 820 major natural catastrophes, with the victim toll of approximately 9000 persons, while the value of economic losses reached USD 150 billion (https://www.munichre.com/topics-online/en/climate-change-and-natural-disasters/natural-disasters/natural-disasters-of-2019-in-figures-tropical-cyclones-cause-highest-losses.html). Meanwhile, according to The Global Risks Report 2020, published by the World Economic Forum and providing replies of over 750 global experts and decision-makers to a survey regarding 10-year outlook, the top five global risks in terms of likelihood are all environmental (https://www.weforum.org/reports/the-global-risks-report-2020).

Latvijas Banka will contribute to the NGFS activities its analysis and share its experience of well-considered and responsible investment management, as well as will continue implementing greening measures, e. g. installation of solar panels for ensuring the operation of the cash storage and processing centre.