NGFS' Reports Guide Central Banks to Invest Sustainably

The Network for Greening the Financial System (NGFS) is making a push for central banks to prioritise sustainability in their investment decisions.

Through a new report and supporting documents, the NGFS offers guidance and recommendations for integrating environmental considerations into portfolio management.

Key Points

• The report, titled "Sustainable and Responsible Investment in central banks' portfolio management – practices and recommendations," outlines a ten-step approach for central banks to deepen their understanding of Sustainable and Responsible Investment (SRI) practices.
• The recommendations are adaptable to each bank's specific circumstances, allowing them to find inspiration from best practices while maintaining their core mandates.
• Case studies showcase successful SRI implementation by other central banks, offering valuable insights for those new to the concept.
• Two technical documents delve deeper into specific areas:

1. Decarbonisation strategies for corporate investments (stocks and bonds)
2. Considering climate-related risks and transition impact in the sovereign investments of central banks

• The reports focus on non-monetary policy portfolios, excluding those used for direct monetary policy interventions.

The NGFS's Goal

By providing these resources, the NGFS aims to empower central banks to implement effective climate-focused SRI strategies. Future work will explore common practices and principles for central bank stewardship in the financial system.

Overall, this initiative signifies a growing recognition among central banks of the importance of integrating sustainability into their investment decisions.

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Source: NGFS