The COP26 climate conference: An overview of climate work at the Bank of Finland
Today the United Nations Climate Change Conference (COP26) negotiations focus on the topic of finance. Mobilising finance is essential in mitigating and adapting to climate change, and central banks are key actors in this field.
The Bank of Finland will continue to do its part to combat climate change. “Climate change related considerations have become an integral part of all of our core activities. We have created a sustainability network covering the whole Bank of Finland to share knowledge and best practices across the organization,” says Bank of Finland Deputy Governor Marja Nykänen.
As a member of the Network for Greening the Financial System (NGFS), we are working towards including climate considerations in the policy frameworks and financial stability analysis of central banks and prudential supervisors. The NGFS and ECB have today published declarationsto the COP26 to accelerate the scaling up of green finance. The Bank of Finland fully supports these declarations.
In July 2021, the Governing Council of the ECB committed to incorporating climate change considerations in its monetary policy framework. As a member of the Eurosystem, the Bank of Finland contributes to this work. The Eurosystem has also agreed a common stance on climate change related sustainable investments in non-monetary policy portfolios. As part of this common stance, the central banks agreed to measure and disclose climate-related metrics on these portfolios. The Bank of Finland has decided to go beyond these minimum requirements both in terms of its responsible investment practices and in reporting.
In September 2021, we committed to carbon neutrality in our own investments by 2050 at the latest. The scope of our climate target includes equities, real estate, corporate credits, as well as our main asset class, sovereign and sub-sovereign investments. By the end of 2021, the Bank of Finland will develop the first set of interim goals, which will include quantitative and qualitative targets, such as thresholds for direct fossil fuel investments, emission reduction targets for equity portfolios and requirements for external fund managers. We are also a signatory to the United Nations-supported Principles for Responsible Investment.
The Bank of Finland has conducted a financial stability analysis on the exposure of the Finnish financial sector to transition risks and physical risks. “We are currently extending our analysis by introducing forward-looking scenarios. We are also actively contributing to international cooperation for improving the availability, comparability, and reliability of climate-related data, such as data on emissions that are needed for assessing financial risks and opportunities related to climate change,” says Deputy Governor Nykänen.
The Bank of Finland's goal is to be one of the most efficient central banks in reducing its climate impact in its own operations. We have already taken several steps to monitor and reduce our carbon footprint. For example, the Bank of Finland has rationalized money supply logistics by centralizing banknote sorting and increasing local circulation of banknotes through cash handling companies.In the future, efforts will be made to offset carbon emissions from air travel and increase remote participation in international meetings.
Read more about our approach to combating climate change: