Climate Change: Managing Financial Risks and Green Finance Initiatives main page 2021

Climate Change: Managing Financial Risks and Green Finance Initiatives

Climate Change: Managing Financial Risks and Green Finance Initiatives

November 29 – December 2 

Chair: Morten Kjærgaard, independent consultant and former head of reserve management, National Bank of Denmark 

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.

Timings: 8am-12pm (ET) | 12pm-4pm (GMT) | 8pm-12am (SGT) 

Course agenda

Two weeks prior to your training course you will be emailed access to our content hub with course materials, including a trial to Central Banking if you are not already subscribed. There will be a combination of articles, reports and presentations that will contribute to two hours of preparation time for the live content. Presentations for the sessions will also be held here subject to the speaker approval.

New Roles and Responsibilities for Central Banks

12:0012:15

Course introduction
Course introduction session led by the chair

13:00 - 13:15

  • Introductions and welcome from the chairperson
  • Overview of the training course
  • Discussion of the delegate expectations
Morten Kjærgaard

Independent consultant

former National Bank of Denmark

Morten is an independent consultant within asset management and public finance. He is former Head of Reserve Management at Danmarks Nationalbank where he was responsible for the trading, risk management, quant and monetary policy collateral units. He has also worked with monetary policy implementation, government debt management and international relations and has worked as an international consultant on behalf of the World Bank.

12:1513:15

Climate change as an emerging source of systemic risk and instability

13:15 - 14:15

  • Overview of key transition, physical and liability risks
  • What are the implications of climate change for financial stability?
  • Examples of technology and policy solutions for effective risk management
  • Key challenges for 2021 and beyond

13:1513:30

Break

14:15 - 14:30

13:3014:30

Integrating climate change and green finance into central bank mandates

14:30 - 15:30

  • 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? 
Audun Gronn

Consultant

Norges Bank

Born 1953. Mr. Grønn holds a graduate degree in economics (cand.oecon. 1979) from the University of Oslo. Work experience since 1980 includes various positions at Norges Bank, including Director of International Department, Director of Statistics Department, and Special Advisor to the Governor. Mr. Grønn spent altogether eight years at IMF’s Executive Board in Washington DC, as Senior Advisor (1989-1992), Alternate Executive Director (2011-2013) and Executive Director (2013-2016), as well as one year at the ECB in Frankfurt as national central bank expert (2005-2006). He retired from his position at Norges Bank in July 2021, but continues as a consultant on a part-time basis.

14:3015:00

Networking break
An opportunity to share experiences with your fellow participants.

15:30 - 16:00

15:0016:00

Greening central banks’ internal operations

16:00 - 17:00

  • 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?
Gábor Gyura

Head of the sustainable finance department

Central Bank of Hungary

Gábor Gyura acts as Head of the Sustainable Finance Department at the Central Bank of Hungary. Being responsible for the Bank’s green agenda, his main work area is the development of the domestic green finance market and the improvement of environmental risk management in the financial system. He is a member of several international committees and working groups in the field of green finance. He has a masters degree in Economics and also holds a PhD in Earth Sciences. Besides his central bank role, he also works as part-time assistant professor at the Budapest University of Technology and Economics.

Incorporating Climate Risks and Sustainability in Portfolio Management and Monetary Policy

12:0013:00

Adapting monetary policy operational frameworks to reflect climate-related risks

13:00 - 14:00

  • 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?

13:0013:15

Break

14:00 - 14:15

13:1514:15

Aligning portfolios with the Paris Agreement

14:15 - 15:15

  • Translating the Paris Agreement into concrete actions
  • What are the main barriers for central banks in Paris-aligned investing?
  • Frameworks and tools available to help align investments
  • Lessons that can be learnt from the private financial sector

14:1514:30

Break

15:15 - 15:30

14:3015:30

Assessing the impact of sustainability considerations on portfolios’ performance

15:30 - 16:30

  • Comparing the performance of sustainable and responsible investments (SRI) to traditional investments
  • The resilience of SRI portfolios during the market stress of the Covid-19 pandemic
  • Challenges central banks face in adopting SRI principles
  • Case study: implementing sustainability considerations into portfolios

Ensuring the Financial System is Resilient to Climate-Related Risks

12:0013:00

Harmonising taxonomies and classifications

13:00 - 14:00

  • Detecting risk differentials between green, non-green and brown financial assets
  • Implementing international or national vs. internally developed classifications
  • Challenges to overcome when classifying financial assets 
  • Discussion: which taxonomies or classifications are participants using in their own organisations?

13:0013:15

Break

14:00 - 14:15

13:1514:15

Effective disclosures: improving governance by improving transparency

14:15 - 15:15

  • 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?

14:1514:45

Networking break
An opportunity to share experiences with your fellow participants.

14:15 - 14:45

14:4515:45

Climate stress testing and modelling

15:30 - 16:30

  • Exposure of financial systems and institutions to significant impacts from climate change
  • Key elements of a stress testing framework
  • NGFS climate scenarios: opportunities and limitations
  • Case study: lessons from a central’s banks experience conducting a climate stress test

Emerging Challenges in Climate Change Standards in Central Banks’ Strategies

12:0013:00

Climate change and the data challenge

13:00 - 14:00

  • Overview of climate-related data needs and gaps
  • Strategies for overcoming issues related to data availability, reliability and comparability
  • Private data providers and the challenges they present
  • Discussion: what challenges does data pose for participants own organisations?

13:0013:15

Break

14:00 - 14:15

13:1514:15

Incorporating climate change and sustainability into strategic plans

14:15 - 15:15

  • 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
Morgan Després

Head of strategy

Banque de France

14:1514:30

Break

14:15 - 14:30

14:3015:00

Closing remarks and delegate action plans
Concluding session led by the chair

15:45 - 16:15

  • 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
Morten Kjærgaard

Independent consultant

former National Bank of Denmark

Morten is an independent consultant within asset management and public finance. He is former Head of Reserve Management at Danmarks Nationalbank where he was responsible for the trading, risk management, quant and monetary policy collateral units. He has also worked with monetary policy implementation, government debt management and international relations and has worked as an international consultant on behalf of the World Bank.

15:0015:15

Feedback forum
We will send a link in this session to the feedback form and would kindly ask that you help us improve the training product by completing the survey. We would also welcome any verbal feedback in this session.

16:15 - 16:30

Date: December 16
The Implementation Workshop is a chair-led forum where attendees will have the opportunity to discuss challenges around implementing the ideas they have learnt during the Live Content. Prior to the workshop you will be emailed questions to prepare in order to gain the most from the session with peers.

13:0014:00

Implementation Workshop

11:00 - 12:00

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

Learning outcomes

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

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Morten Kjærgaard

Independent consultant

former National Bank of Denmark

Morten is an independent consultant within asset management and public finance. He is former Head of Reserve Management at Danmarks Nationalbank where he was responsible for the trading, risk management, quant and monetary policy collateral units. He has also worked with monetary policy implementation, government debt management and international relations and has worked as an international consultant on behalf of the World Bank.