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NGFS Offers Central Banks Sustainable Investing Insights

The Network for Greening the Financial System (NGFS) has published a cover report and two technical documents on sustainable and responsible investment (SRI) in central banks’ portfolio management. The cover report has outlined ten recommendations for central banks to deepen their understanding of SRI policies and improve their related practices, such as recommending ways of including sustainability considerations in governance frameworks, and of measuring exposures to sustainability-related risks. The first technical document examined how central banks can integrate net zero considerations into their investments in equity and corporate bonds, touching on the challenges they may face when implementing such strategies. The second technical document outlined the available metrics that can inform central banks’ strategies to capture climate-related risks, opportunities, and impacts on their sovereign holdings. The NGFS has encouraged all central banks and supervisors globally to include sustainability considerations in their portfolio management, without prejudice to their primary mandates. “Central banks ought to understand and respond to the risks that climate change poses to the integrity of their balance sheets,” said NGFS Chair Sabine Mauderer. “Aligning our own portfolios with SRI practices can help us to meet this challenge. Central banks across the world are adopting SRI practices – which is laudable – but many are still at the early stage of implementation.”

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