Climate work at the Bank of Finland
Climate change and biodiversity loss pose risks both to the economy and the financial sector. It is important that central banks assess the impacts of these changes and of the transition to a carbon-neutral society in order to be able to consider them in safeguarding price stability and financial stability. Central banks are not the primary actors in combating climate warming and biodiversity loss, but they have a strong supporting role within the scope of their mandate.
Climate change and the decrease in biodiversity pose risks both to the economy and the financial sector.
As part of the Eurosystem, the Bank of Finland has taken actions to consider various aspects of climate change in monetary policy. Among other things, these actions improve the quality and coverage of climate data, which is important for risk analysis and reporting, and mitigate climate risks related to monetary policy operations.
One area of focus of the Bank of Finland's sustainability programme is the management of climate risks. We are committed to integrating environmental, social responsibility and governance factors in investment decision-making and ownership practices, and we signed the UN-supported Principles for Responsible Investment (PRI) in December 2019. By investing in a responsible manner, the Bank of Finland makes a positive contribution to climate work.
We are committed to integrating environmental, social responsibility and governance factors in investment decision-making and ownership practices, and we have signed the UN-supported Principles for Responsible Investment (PRI).
As regards the financial sector, key actions in the Bank of Finland's climate work include climate risk analysis and supporting the green transition. The Bank of Finland participates in the development of data and tools important for risk analysis, including climate stress tests, on various cooperation forums. By promoting risk management, we enhance the capabilities of the financial sector to participate in financing the green transition.
In accordance with our sustainability programme, reducing our own environmental and carbon footprint and increasing general awareness of climate risks play important parts in our activities.
Climate risk and biodiversity loss must be considered extensively throughout the organisation. To ensure an optimal exchange of information and cooperation, the Bank of Finland and the Financial Supervisory Authority (FIN-FSA) have established ILMO, a cooperation group for climate. It includes experts on climate and environmental issues from both organisations. The objective of the group is to promote cooperation in analysis and policy-making concerning climate change and biodiversity. The group functions as an intermediary for information and expertise: it shares information on analysis and policy being made by different units and collates and maintains an overall view of work in progress. The cooperation group for climate also promotes the exchange of best practices and information in order to develop research and capabilities, and it organises annual seminars to foster the flow of information on environmental and climate topics within the Bank of Finland and the FIN-FSA.