Published: 15th Nov, 2021
Context
The Reserve Bank of India (RBI) published its ‘Statement of Commitment to Support Greening India’s Financial System – NGFS’, coinciding with the 2021 United Nations Climate Change Conference (COP26).
About
What is NGFS?
- Launched at the Paris One Planet Summit on December 12, 2017, NGFS is a group of central banks and supervisors willing to share best practices and contribute to the development of environment and climate risk management in the financial sector while mobilising mainstream finance to support the transition towards a sustainable economy.
- The Network’s purpose is to:
- help strengthening the global response required to meet the goals of the Paris agreement
- to enhance the role of the financial system to manage risks
- to mobilize capital for green and low-carbon investments in the broader context of environmentally sustainable development
RBI’s integrating towards ‘green solutions’
- RBI is committed to integrating climate-related risks into financial stability monitoring as well as exploring use of climate scenario exercises to identify vulnerabilities in the central bank-supervised entities.
- The apex bank joined the Central Banks and Supervisors Network for Greening the Financial System (NGFS) as a Member in April this year, and aims to learn from as well as contribute to global efforts on green finance.
- NGFS has reiterated its willingness to contribute to the global response required to meet the objectives of the Paris Agreement, and, to that end, NGFS will expand and strengthen the collective efforts towards greening the financial system.
Major commitments made by RBI
Specifically, keeping in view national commitments, priorities and complexity of our financial system, RBI commits to:
- Exploring how climate scenario exercises can be used to identify vulnerabilities in RBI supervised entities' balance sheets, business models and gaps in their capabilities for measuring and managing climate-related financial risks
- integrating climate-related risks into financial stability monitoring
- Building awareness about climate-related risks among regulated financial institutions and spreading knowledge about issues relating to climate change and methods to deal with them accordingly.
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