Climate Change: Managing Financial Risks and Green Finance Initiatives

Why Attend

In 2022, it is no longer a question of whether central banks should address climate change, but rather how and when. For central banks, their contribution can be separated into three parts: as market players in both domestic and foreign operations; as supervisors and the institution responsible for financial stability, and thirdly as institutions themselves, their operations and impact. Yet, questions remain around how to incorporate these shifts into existing mandates and objectives and the practical and communication challenges that in turn presents. More broadly, how they bring together these efforts at an institutional, strategic level will come into focus. This course is designed to equip central bankers to meet these challenges. Each day will feature three hours of expert-led Live Content to maximise the opportunity to share and learn. The chair will ensure participants have opportunities to network throughout the course, culminating in the Practical Implementation Workshop.

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Course Objectives

  • At the conclusion of the training, participants will be able to:
  • • Understand the relation of climate policy and mandate
  • • Assess the impact on domestic and foreign operations
  • • Gain insight into scenario analysis and stress testing as part of the toolkit to managing financial risk
  • • Understand how to implement ESG into the portfolio and manage the risks
  • • Understand the challenges that central banks face with data quality and variability

Target Audience

Central Bankers only

New Roles and Responsibilities for Central Banks


Climate change as an emerging source of systemic risk and instability

  • Granular mapping of key transition and physical risks
  • Forward looking assessment of implications of climate change for financial stability
  • Prudential policy considerations


Integrating climate change and green finance into central bank mandates

  • Do climate-related risks and mitigation policies fit into central bank mandates and objectives?
  • Should central banks be mandated to play a role in greening the financial system?
  • Comparing mandates and policy tools in high-income regions vs. developing economies
  • Discussion: what are the risks of overstretching central banks’ mandates?


Greening central banks’ internal operations

  • What are central banks doing to green their internal operations?
  • Key sustainability goals and targets for cutting central banks’ environmental footprints
  • Successes and challenges from central banks with advanced green initiatives
  • Discussion: which areas are participants’ own organisations focused on greening?

Incorporating Climate Risks and Sustainability in Portfolio Management and Monetary Policy


Climate stress testing and modelling

  • Climate change: risks for financial stability
  • Climate change: the supervisory approach
  • Climate change stress testing: design and conceptual issues
  • Case studies: lessons and some results from climate change stress testing


Implementing a sustainability mandate into a reserve management framework

  • Investing in instruments issued for sustainable purposes
  • Using ESG metrics to support investment decision-making
  • Integrating climate considerations into investment beliefs
  • Conducting risk management with a sustainability focus


Sustainable investing: key challenges and opportunities

  • Emergence of sustainable investing as the new normal
  • Impact of ESG mandate on the investment strategies of central banks
  • Tips for balancing financial and sustainability requirements
  • Criteria for assessing the suitability of available products and services

Ensuring the Financial System is Resilient to Climate-Related Risks


Adapting monetary policy operational frameworks to reflect climate-related risks

  • The challenges of assessing the consequences for monetary policy effectiveness
  • Identifying the options that a central bank could consider
  • Assessing potential climate-related adjustments to monetary policy operational frameworks 
  • Discussion: is disclosure a prerequisite for other potential adjustments?


Climate change and the data challenge

  • Overview of climate-related data needs, availability and gaps
  • Key environmental metrics identified by central banks
  • Discussion: what challenges does data pose for participants own organisations?


Effective disclosures: improving governance by improving transparency

  • Improving and increasing reporting of climate-related financial information
  • Opportunities and challenges of climate disclosures
  • Areas of the TCFD framework useful for central banks’ own disclosures
  • Discussion: should central banks mandate disclosures?



Emerging Challenges in Climate Change Standards in Central Banks’ Strategies


Green taxonomies and disclosure requirements

  • The EU green taxonomy and its applications
  • Disclosure requirements linked to the EU green taxonomy
  • Estimating the taxonomy-alignment and the exposure to transition risk in financial portfolios
  • Discussion: which taxonomies are participants using in their own organisations?


Incorporating climate change and sustainability into strategic plans

  • Developing a clear strategic view of central banks’ appetite for climate-related risks
  • Introducing explicit strategies to support the transition to net-zero
  • Liaising and coordinating with supervisors and policymakers
  • Case study: a central bank’s strategic plan for climate change


Closing remarks and delegate action plans

  • Summary of the course
  • Discussion of the observed trends and case studies
  • Application of learning points in the delegates’ home organisations
  • Preparation of action points

Implementation Workshop

Benefits of attending the Implementation Workshop:

  • Developments in the area since the live content sessions, including new resource material
  • Questions arising since returning to the central bank
  • Challenges of implementation: where are the roadblocks?
  • Medium-term goals: what is realistic?
  • Establishment of group network to keep in touch with peers and share best practices

This course has not been scheduled, however you can request for In-House training