Climate Change: “In a challenging and uncertain environment, we should not lose sight of climate-related risks and our collective roles in addressing those risks”

• The Central Bank of Ireland is committed to being a sustainable organisation and has published today the steps it is taking in its Climate Action Roadmap.
• As part of the broader Eurosystem approach, the Central Bank has also published its first disclosures on the climate-related risks and environmental footprint of its investment assets.
• The Central Bank continues to focus on ensuring that the financial system is resilient to climate-related risks and capable of supporting the transition to a climate-neutral future. The (re)insurance sector has a key role to play and guidance has been published by the Central Bank to assist the sector in developing appropriate governance and risk management frameworks.

 Climate change is a key focus in the Central Bank’s Strategic Plan.

The Central Bank has today (27 March 2023) published the first annual climate-related financial disclosures of its investment assets (PDF 865.47KB). It sets out information on the climate-related impact of the Central Bank’s investment assets. The emissions profile has remained relatively stable over the three-year period considered (2020 - 2022). As part of this disclosure, the Central Bank is setting a long-term target to align its euro-denominated investment assets with the decarbonisation objectives of the EU and the Irish State, in support of the Paris Agreement.

The disclosures are an important step towards enhanced transparency, both in relation to climate-related risks and the environmental footprint of investment assets held by central banks in the euro area. It forms part of the common Eurosystem stance for climate change-related sustainable and responsible investment principles for euro-denominated non-monetary policy portfolios. The Central Bank aims to publish climate-related disclosures on its investment assets on an annual basis.

Today’s publication is the latest in a series of measures taken by the Central Bank of Ireland to embed climate change and sustainability considerations into its own operations.

The Central Bank has published today its Climate Action Roadmap (PDF 437.69KB) which sets out its commitment to being a sustainable organisation. Significant progress has already been made in how it manages its operations through a single integrated management system, certified to best practice standards.

As part of the Roadmap, the Central Bank has established a Sustainability Taskforce to lead and coordinate on this commitment. It will deliver on its commitments in the wider context of the Government Climate Action Plan, and the obligations on public sector bodies as set out in the Public Sector Climate Action Mandate.

In addition, and in the context of its role in ensuring that the financial system is itself resilient to climate-related risks and capable of supporting the transition to a climate-neutral future, the Central Bank has also published Guidance for (Re)Insurance Undertakings on Climate Change Risk (the Guidance) following a period of consultation (PDF 431.58KB). The Guidance is designed to help (re)insurers address such risks in their business and to assist them in developing appropriate governance and risk management frameworks.

Commenting on today’s publications, Deputy Governor, Sharon Donnery said,

“In a challenging and uncertain environment, we need to remain focused on climate-related risks and our collective roles in addressing those risks. For the Central Bank’s part, we remain committed to addressing climate risks in our own operations and in the delivery of our mandate. We also continue to see the important role the financial sector plays in addressing climate-related risks and supporting the transition to a climate-neutral future. 

Taking action to ensure the financial system is resilient to climate-related risks, and to embedding climate change considerations across our own operations, is a key strategic priority for the Central Bank. The publications shared today underline our commitment to this goal, both as an organisation and as a central bank and regulator, and aim to provide transparency around our approach to the significant challenges posed by climate change.”

Notes to Editor

The Eurosystem comprises the European Central Bank and the national central banks of those countries that have adopted the euro.

The climate-related financial disclosures of the non-monetary policy portfolios provide information on the climate-related impact of the Central Bank’s investment assets.

The common Eurosystem disclosure framework was developed through extensive collaboration between national central banks of the Eurosystem and the ECB. The disclosure framework is underpinned by the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures, the Partnership for Carbon Accounting Financials, and the Network for Greening the Financial System.

The disclosures published today also align with the Central Bank’s commitment to transparency as outlined in its inaugural Sustainable Investment Charter (PDF 435.92KB), published in June 2022.

The Central Bank of Ireland currently holds c. €16.6bn of investment assets. These are mostly invested in government bonds and other high-quality fixed income securities. The Central Bank also manages a share of the ECB’s US dollar reserve assets. More information on the Central Bank’s investment portfolio can be found in its Annual Report and Performance Statement.

European Central Bank – Climate-related financial disclosures