DNB published a guide, which is prepared by the Network for Greening the Financial System (NGFS), on sustainable and responsible investment for portfolio management of central banks. The guide identifies five strategies for sustainable and responsible investment, with the most prominent strategies being green bond investments and negative screening for equity and corporate bond holdings. The guide builds on the results of a portfolio management survey on sustainable and responsible investment among the NGFS members and concludes with case studies of first-hand experiences by some NGFS members.
The case studies presented in the guide are intended to help build critical momentum and lower barriers for other central banks to follow suit, thus speeding up the transition to a more sustainable economy. According to the survey on sustainable and responsible investment, there is a growing momentum among NGFS members, with 25 out of the 27 respondents either having adopted the sustainable and responsible investment principles in their investment approach or planning to adopt these principles. The principles range from a broad scope of environmental, social, and governance (ESG) considerations to a climate-specific focus. The survey also indicates that most central banks use (40%), or are considering using (36%), a third-party ESG data provider. This guide is part of the NGFS mission to encourage central banks and supervisors across the globe to lead by example and include sustainability considerations in their portfolio management.
In the coming months, the NGFS will continue to work on additional technical documents, including further details on the NGFS transition scenarios and guidelines on scenario-based climate risk analysis, along with a guide on supervision practices. NGFS, which was launched December 12, 2017, is a group of about 46 central banks and supervisors voluntarily willing to share best practices and contribute to the development of environment and climate risk management in the financial sector and to mobilize mainstream finance to support the transition toward a sustainable economy. The NGFS is chaired by Frank Elderson, executive board member of DNB.
Keywords: Europe, Netherlands, Banking, Insurance, Securities, Pensions, Guide, Sustainable Finance, ESG, Climate Change Risk, NGFS, DNB
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