Publication of the report “Climate-related disclosures of the BCL’s non-monetary policy portfolios”

The BCL has released its first climate-related financial disclosures on its NMPPs, which include the bank’s own fund investments and staff pension fund. The disclosures follow the recommendations of the TCFD of the FSB and are in line with applicable Eurosystem methodology. The BCL has also taken into due consideration the guidance provided for central banks by the NGFS.
The BCL has adopted an integrated approach for the governance of climate-related risks and opportunities in its NMPPs, according to which climate change-related considerations are addressed within its existing governance structures. Governance of the NMPPs is based primarily on the BCL’s asset management framework, which encourages an integrated investment process that supports and is fully aligned with the strategic goals of the central bank.
The BCL’s NMPPs are exposed to climate risks, which might lead to adverse outcomes in the event of a gradual change in risk factors or a climate shock. Transition risks and physical risks are distinguished. Transition risks concern the likelihood and impact of the economic consequences of the transition to a carbon-neutral economy. Physical risks, by contrast, concern the likelihood and impact of severe weather events or natural disasters occurring. The bank actively identifies, assesses and manages the exposure of its non-monetary policy portfolios to climate-related risks.
The BCL advocates monitoring and disclosing in line with the best available information and in a transparent way as to spur developments in the field. For that purpose, the Eurosystem has jointly identified common data sources. The approaches and methodologies described in the report are based on the current best practices for greening central banks NMPPs, the data available at the moment of the report, along with the relevant framework. They are therefore subject to further analysis and scrutiny and may evolve in the future in line with any new developments in the field of climate risk and sustainability.
Hence, the BCL is striving to improve the identification, management and mitigation of climate risks within the limits of its mandate and in accordance with the Eurosystem stance. The bank has adopted an integrated approach for the governance of climate-related risks and opportunities in its NMPPs, and actively identifies, assesses and manages the exposure of its non-monetary policy portfolios to climate-related risks. The BCL advocates monitoring and disclosing in line with the best available information and in a transparent way as to spur developments in the field.