Network for Greening the Financial System (NGFS)

📢 The NGFS is organizing a virtual outreach event on 8th November to present the upcoming release (Phase V) of its long-term climate scenarios. It will contain an updated set of scenarios on the macro-financial impacts of climate change and of the transition policies needed to mitigate it. Do not miss this opportunity to join the session! 👉 Register here: https://lnkd.in/e53n5tGy

🎙 “The Banco de la República is firmly committed to developing research aimed at identifying the economic and financial risks of climate change and contributing to raising knowledge about its effects on the Colombian economy. We are confident that this way we contribute to the discussions on the appropriate design of a climate public policy in Colombia.” If you want to learn more about the Banco de la Republica’s involvement with the #NGFS, take a look at our latest interview with Joaquin Bernal, Advisor to the Governor at the Banco de la República - Colombia. ➡️ Read more: https://lnkd.in/eST_p65y

🌱 𝐂𝐥𝐢𝐦𝐚𝐭𝐞 𝐜𝐡𝐚𝐧𝐠𝐞, 𝐭𝐡𝐞 𝐦𝐚𝐜𝐫𝐨𝐞𝐜𝐨𝐧𝐨𝐦𝐲 𝐚𝐧𝐝 𝐦𝐨𝐧𝐞𝐭𝐚𝐫𝐲 𝐩𝐨𝐥𝐢𝐜𝐲 As #climatechange and the transition to #netzero increasingly have macroeconomic impacts over time horizons relevant for monetary policymakers, it is crucial for #centralbanks to better understand these impacts and thoroughly assess their implications for #monetarypolicy.   📗 In response, the Network for Greening the Financial System (NGFS) has today published a report on climate change, the macroeconomy and monetary policy, which consolidates the key messages from its recent trio of publications that focused on how 𝐚𝐜𝐮𝐭𝐞 𝐩𝐡𝐲𝐬𝐢𝐜𝐚𝐥 𝐡𝐚𝐳𝐚𝐫𝐝𝐬 and the 𝐠𝐫𝐞𝐞𝐧 𝐭𝐫𝐚𝐧𝐬𝐢𝐭𝐢𝐨𝐧 impact variables such as output and inflation, while also providing guidance on how to embed climate considerations within central banks' 𝐦𝐚𝐜𝐫𝐨𝐞𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐦𝐨𝐝𝐞𝐥𝐥𝐢𝐧𝐠 frameworks. This work will serve as a foundation for further analysis to assess the implications of climate change for monetary policy.   Some of the key takeaways of this work include:   ⛈ Extreme weather events tend to result in increased volatility and lower output in the short run, while the impact on inflation will depend on how supply and demand are affected and the response of monetary policy. While monetary policy has so far typically looked through the first-round effects of such events, as the trade-offs become more persistent – for example because of repeated and more extreme events – doing so may become more challenging.   🌳 Climate transition policies vary in their macroeconomic impact, with some materialising similarly to negative supply shocks, while others may present similarly to demand shocks, requiring different considerations for the response of monetary policy. Moreover, how policies are implemented will also have macroeconomic implications. Climate change and the transition may also impact the long-run equilibrium real interest rate (R*).   📊 Central banks have been developing their analytical toolkits to understand the macroeconomic impacts from climate change and the transition. Even if accuracy can be challenging to achieve given the many uncertainties, we cannot let the best be enemy of the good. When it comes to climate change, even though central banks may have different mandates, all are concerned by the need to understand the macroeconomic shocks and forces shaping their economies (which are likely to differ across jurisdictions).   🔎 𝐂𝐮𝐫𝐢𝐨𝐮𝐬 𝐭𝐨 𝐤𝐧𝐨𝐰 𝐦𝐨𝐫𝐞? The full report is available on the #NGFS website: https://lnkd.in/eB5xR4ua   Read the three reports underpinning this work here: 📕 Acute physical impacts: https://lnkd.in/efeQVyN6 📘 Green transition: https://lnkd.in/enBzzgAa 📙 Macro modelling handbook: https://lnkd.in/eFytwtM3

🌍📢 The NGFS Cali-Baku Pledge to Enable Action is here! The Network for Greening the Financial System (NGFS) is proud to announce the release of the NGFS Cali-Baku Pledge to Enable Action, launched on the occasion of the 2024 #UnitedNations Biodiversity Conference (#COP16) and Climate Change Conference (#COP29). With the NGFS Cali-Baku Pledge, our coalition that brings together 141 #CentralBanks and #FinancialSupervisors and 21 observers reaffirms its commitment to tackling the interrelated challenges of #ClimateChange, #BiodiversityLoss, and #NatureDegradation. In the Cali-Baku Pledge, the NGFS : 🔹 #Recognises the need to consider the economic impacts and financial risks arising from climate change and nature degradation with an integrated approach to fulfil monetary policy and financial stability mandates; 🔹 #Commits to helping its members integrate climate and nature-related financial risks by providing analytical frameworks, tools, and guidance; 🔹 #Invites the broader financial community – including ministries of finance, financial institutions and corporates – to make use of these resources. This pledge aligns with the priorities of both COP16 and COP29, emphasising the importance of #action and #implementation to meet global climate and biodiversity goals. The NGFS will continue to serve as a technical and analytical reference for the integration of these priorities into the financial system, offering valuable resources for all stakeholders. 💼 We invite you to explore the resources mentioned in the #NGFSCaliBakuPledge and join us in greening the financial system! 🔗 More details on the #CaliBakuPledge: https://lnkd.in/eNfKs2QG 🔗 Learn more about the NGFS resources and tools in our annual report: https://lnkd.in/eTPeZ6sa

🌐 Today, the Network for Greening the Financial System (NGFS) published a Climate macroeconomic #modelling handbook, which provides practical guidance for central banks on how to incorporate the impacts of #climatechange on #monetarypolicy into their macromodelling toolkit. Central banks have identified a range of challenges in modelling the impacts from climate change and the transition. Some can be addressed by adapting existing toolkits, but novel approaches may also be required. The #handbook accompanies central banks at various stages of progress in their climate macroeconomic modelling. 💡 While there is no modelling “silver bullet”, the handbook assesses the relative strengths and use cases of different approaches to better account for physical and transition impacts. Curious to know more? ➡ The full report is available on the NGFS’s website: https://lnkd.in/eFytwtM3 📚 This document is the third in a series of reports that are being published by the NGFS on the #macroeconomics of climate change and monetary policy. The first report in this series focused on the acute physical impacts from climate change and monetary policy. The second report, published earlier this week, examined the impacts of the green transition on the macroeconomy  A summary report with the key findings from these three reports will be released on Tuesday next week. So stay tuned! #monetarypolicy #climatechange #centralbank #centralbanking #macromodelling #economy

🌿 NGFS at #COP16 🌿 The Network for Greening the Financial System will be at the UN #Biodiversity Conference in Cali! We are excited to participate in key discussions around aligning finance with biodiversity goals and the role of #centralbanks and #financialsupervisors in addressing nature-related financial risks. 📅 Save the dates! ➡ The NGFS will co-host an event with Finance for Biodiversity on Central banks and supervisors’ actions on nature-related financial risks and transition planning at the #FinanceandBiodiversity pavilion on October 30. ➡ The NGFS Secretary General, Yann Marin, will be speaking at a COP16 #FinanceDay plenary session on the financial system response to the #GBF since COP15. ➡ The NGFS representatives in Cali (Yann Marin, Marc Reinke, Sjoerd van der Zwaag) will be engaging in several more sessions with key partners between October 27 and October 30, including the Taskforce on Nature-related Financial Disclosures (TNFD), European Central Bank, The World Bank, United Nations Environment Programme Finance Initiative (UNEP FI), WWF, and Institute of International Finance. More information on our speaking engagements below! ⬇ #UNCBD #NGFS #FinanceForNature #COP16

What is the impact of climate change on the real economy? What does it mean for business and monetary policy? To answer these questions, a great line-up of speakers awaits you at the #GreenSwanConference on 9 November 2024. Join the livestream and hear what they have to say! The Green Swan Conference is jointly organised by the Bank for International Settlements, the Bank of Japan, the Banco de España and the Network for Greening the Financial System (NGFS). The entire event will be livestreamed on the BIS website and the BIS YouTube channel. After the event, recordings of the sessions will be available as well. More info on the BIS website - https://lnkd.in/e5E3jufG

Today, the NGFS published a report on the green transition and the macroeconomy with a monetary policy perspective. As governments across the world implement policies to address the threat posed by unmitigated climate change and seek to transition their economies to net zero, these actions are likely to increasingly have macroeconomic consequences over horizons that are relevant for monetary policy. It is therefore important for central banks to better understand these macroeconomic effects to better account for these in their monetary policy assessment and decision-making. The report looks at the channels through which macroeconomic variables could be affected by the transition to net zero, such as climate change mitigation policies (carbon pricing, green subsidies and investment, non-market based measures and regulation), innovation in green technologies and changes in preferences. Among its key messages, the report finds that some policies are likely to generate challenging inflation-output trade-offs for policymakers, since overall effects on inflation are influenced by the design of policies, and that the trade-off depends on the credibility and pace of implementation of policies. A disorderly transition on the other hand could lead to increased economic volatility. ➡ Curious to know more about the key findings? The full report is available on the NGFS’s website: https://lnkd.in/gXfQUqGC This document is the second in a series of reports that are being published by the NGFS on the macroeconomics of climate change and monetary policy. The first report in this series focused on the acute physical impacts from climate change and monetary policy. On Thursday, we will publish the final report, which looks at central banks’ approaches to modelling the effects of climate change. So stay tuned! #monetarypolicy #climatechange #centralbank #centralbanking #netzero #economy

🎙 “APRA sees real value from collaborating with peer supervisors on climate risk. The NGFS offers a diverse and inclusive forum for collaboration and produces tangible outputs that support the work of supervisors globally”   If you want to learn more about the Australian Prudential Regulation Authority’s involvement with the #NGFS, take a look at our latest interview with Sean Carmody, Executive Director Policy & Advice at the Australian Prudential Regulation Authority   ➡️ Read more: https://lnkd.in/eDzt2gVM

A week ago, European Central Bank Executive Board member Frank Elderson underlined the importance of considering the legal, economic and financial implications of nature-related risks in the conduct of a central banking and supervision mandate.   🌳 Nature-related risks are a significant topic of work for the NGFS. The Network has developed a Conceptual framework that provides central banks and supervisors with a common understanding of nature-related risks and a principle-based risk assessment method. One of our latest pursuits is the exploration of nature-related developments in the field of litigation. In a recently published report, mentioned by Mr Elderson in his speech, we highlight that nature-related litigation can affect financial institutions both directly and indirectly; and that the number of nature-related cases is expected to grow rapidly.   Find the latest NGFS nature publications here: 👉 NGFS Conceptual framework on nature-related risks : https://lnkd.in/emyFuFVH 👉 NGFS Technical document on nature-related litigation: https://lnkd.in/e7sN2tu3