Abstract: The article examines to what extent central banks transmit the significance of climate risks for the financial stability to markets. Using simple text-mining techniques we explore Financial stability reports (FSR) of central banks from our sample to assess the relative importance of climate-related topics. In particular, we assess an intensity and a regularity of climate topics in FSR text corpora as subfactors of their importance. We assume that a high importance of climate topics in central banks communication facilitated by their regularity gives a strong signal to markets about the significance of climate risks for the financial stability. Our findings however indicate a generally low importance of climate-related topics in central banks communication (by means of FSR) which contrasts with the high urgency of climate considerations for the financial stability nowadays.
<a href="https://dx.doi.org/10.15611/fins.2022.2.07">DOI: 10.15611/fins.2022.2.07</a>
<p>JEL Classification: E52, E58, E71, G41</p>
<p>Keywords: climate risk, financial stability, centralbank, communication, FSR</p>
<h2>1. Introduction</h2>
<p>Climate change will have a great impact on many aspects of the
financial system. Central banks being an important part of the financial
system will eventually become involved in climate initiatives, whether
directly or indirectly. The globally adopted manner of the transition to
a net-zero economy is based on sustainable finance, seen as key in
enhancing such a transition (European Commission, 2018). Sustainable
finance covers a number of initiatives aimed to support investments into
projects essential to limit carbon emissions. Sustainable finance
initiatives will bring about substantial changes in the financial
landscape. Central banking, as part of the financial system, cannot stay
neutral to these changes. Eventually central banks will be part of the
transition, the only question is – to what extent? Both academics and
experts are debating what role central banking is supposed to play in
the net-zero transition, which is still in its early stage. This article
contributes to the growing literature on how central banks address
climate change, and focuses on their role in raising the financial
markets awareness of climate risk.</p>
<p>Boneva, Ferrucci, and Mongelli (2021) pointed out that most central
bank mandates “do not explicitly reference sustainability, raising the
issue of whether central banks have the legitimacy to deploy their
monetary policy tools to support sustainability objectives”. Dikau and
Volz (2021) examined the mandates of 135 central banks worldwide and
showed that currently only 12% of them operate under mandate that
explicitly include sustainable growth and development, while other 40%
are tasked to support their government policy objectives within their
secondary remits<a href="#fn1">1</a>. Formally most inflation targeting
banks continue functioning within a single mandate framework, which
means that the primary objective of their activity is concentrated on
achieving price stability. In practice, due to the central banks
involvement in providing financial stability during and after the
financial crisis, their mission has been seen as broader over the last
decade: beyond the primary objective, such a broader central bank
mandate also incorporates, implicitly or explicitly, financial stability
tasks while secondary remits are viewed as room for the possible
expansion of the central bank’s mission in the face of ongoing
developments. There are, however, supporters of a narrow central banks’
mandate, limited to the price stability objective, which is seen as the
way to maintain central banks’ effectiveness in the monetary policy
domain. This ‘narrow mandate’ argument often appears in criticism of
central banks involvement in climate considerations (see e.g.
Bartholomew &Diggle, 2021; Bolton et al., 2021; Boneva et al.,
2021). Central bankers recognize the significance of this problem. These
legitimacy concerns were defined most explicitly by the President of the
ECB Christine Lagarde speaking on the Green Swan Conference in 2021:
“our planet is burning and we, central bankers, could look down to our
mandate and pretend that it is for others to act and we should be simply
followers? I don’t think so” (Carstens et al., 2021). Yet, Bolton et al.
(2021) pointed out that the urgency of addressing climate change risk
could potentially bring us to a situation described by as “mission
creep”: “where the central bank keeps adding tasks with accountability
suffering”. In this regard, the Network of Central Banks and Supervisors
for Greening the Financial System (NGFS), launched to promote the
implementation of best practices and to develop analytical work on green
finance, has recommended to its members to explain the implications of
legal mandates for their climate-related actions (NFGS, 2021). This
effort may be helpful in determining the climate commitment degree of
central banks by resolving the aforementioned “mandate dilemma”. The
author also recognised the significance of this dilemma in determining
how committed the central bank is to climate concerns, and in this study
sought to link assessments of the importance of climate-related topics
in the financial stability communication to the legitimacy issue of a
central bank mandate (i.e. whether a central bank explicitly includes
sustainable growth or development, and if not, what flexibility for the
central bank’s involvement in climate considerations brings its
secondary remit, whether a central bank incorporates financial stability
in its mandate explicitly, etc.).</p>
<p>Numerous experts acknowledge that the materialisation of
climate-related risks can result in increasing financial risk (Bolton et
al. (2020), Brunnermeier & Landau (2020), Sveriges Riksbank (2019),
Board of Governors of the Federal Reserve System (2020)). This was
adopted to identify at least two main channels through which climate
change can affect financial stability: "physical risk" and "transition
risk" (see Monnin, 2018; Bolton et al. 2020). Kuroda (2021) indicated
that financial institutions as well as other economic entities are
exposed to the impact of climate change through the aforementioned
channels, which could potentially lead to the destabilization of the
financial system. Pereira da Silva (2019) suggested that such potential
financial consequences of climate-related risks could “amount to a new
form of systemic risk with implications for financial stability”.
Similarly to the interlinkages between the price stability and the
financial stability tasks – price stability strengthens financial
stability and vice versa financial stability is necessary for effective
monetary policy transmission – the stability of the financial system
(resulting in the proper functioning of financial intermediation) is
vital for achieving climate goals (Kuroda, 2021).</p>
<p>The aforementioned interlinkages between central bank tasks within
the broader mandate imply that climate change issues should be
incorporated by central banks in many areas of their activities. As C.
Lagard said: “climate change has to be factored in throughout the whole
range of central banks activity (Carstens et al., 2021). Boneva et al.
(2021) proposed dividing actions into three main categories. The first
covers the actions aimed to protect central banks’ balance sheets and
preserve their ability to carry out the price stability mandate against
the materialization of climate risks. The second category covers actions
aimed at mitigating climate change by raising awareness of climate
risks, but without the central bank having to make active use of its
balance sheet. The actions covered by these two categories do not
compromise the primary mandates of central banks, while those under the
third category are more proactive, also in using central banks’ balance
sheets. They involve greening the portfolios of central banks as well as
non-monetary policy portfolios, green QE, etc. This study considered the
second category of central banks’ actions.</p>
<p>A body of literature has identified the problem that financial
markets still do not fully price climate change risk – a larger exposure
to climate change has not yet been reflected in a higher risk premium
(see e.g. Carney, 2015; Christophers, 2017; IMF, 2020; Monnin, 2018).
The reason is often seen in “the climate change tragedy of horizons”
(see e.g. Carney, 2015; Monnin, 2018) – market participants do not
consider climate change risks because they are beyond the horizon of
their analysis. The central banks’ role in breaking this discrepancy is
to raise awareness of climate risks. This article focuses on assessing
to what extent climate-related considerations are important for central
banks nowadays, and considers climate-related risk as part of the
financial risk within the financial stability framework. In order to
assess the current importance of climate-related considerations for
central banks the author examined their communications with the markets
in the financial stability domain.</p>
<h2>2. Methodology </h2>
<p>The study used simple text-mining techniques to explore the
importance of climate-related topics in a key central banks publication
on financial stability – the Financial Stability Report (FSR). The
examined sample covers 16 central banks: ECB, the Federal Reserve, the
Bank of England and central banks of 13 EU countries (see Table 1).) The
study is mainly focused on EU countries, considering the EU as a global
headliner in addressing climate risks. Additionally, the Global
Financial Stability Reports (GFSR) published by the IMF were analysed
mainly as a benchmark of global trends.</p>
<p>The preliminary analysis indicated the presence of climate-related
topics in FSR issues published by the central banks from the sample
mainly from 2018 onwards<a href="#fn2">2</a>, which could be associated with the
introduction by the European Commission of its action plan on
sustainable financing implementation that year (European Commission,
2018). This also corresponds to the trend noticed in GFSR publications.
Thus this study covers all FSR published by the central banks from the
sample in the period 2018–2021. Typically, these reports are published
twice a year, but in the case of certain central banks this is done only
once a year (in total 4 countries of out the sample)<a href="#fn3">3</a>,
which amounted to 111 FSR to examine.</p>
<p>This study’s assessment of the importance of climate-related topics
is based on an integrated evaluation of its intensity and regularity.
First, the author computed the raw count of the word ‘climate’
collocated in the subject literature with the words ‘risks’, ‘policy’
‘change’, ‘neutrality’, etc.<a href="#fn4">4</a> For each individual FSR
body of text from the sample. In order to assess the intensity of
climate-related topics in these texts the author obtained scaled word
frequencies dividing the raw count for ‘climate’ topics by the raw count
for ‘risk’ topics (<em>Ftclimate/risk
=Ftscaled_climate/
Ftscaled_risk, t ∈ [2018:2021]</em>)<a href="#fn5">5</a>.
The regularity assessment was based on variances of the obtained
intensities – the bigger the variance, the lower the regularity.</p>
<p>To assess the importance of climate-related topics the author used
the rank ordering of the degree of the regularity and the intensity
obtained for each central bank from the sample. The criteria divided the
regularity and the intensity into ranges and assigned each an assessment
with the following categories: very low, low, intermediate and high
(Table 1).</p>
<p>Table 1. An assessment of the importance of climate-related topics in
central banks’ communication(by means of FSR)</p>
<table class="table table-bordered">
<colgroup>
<col></col>
<col></col>
<col></col>
<col></col>
</colgroup>
<thead>
<tr><th>Criteria of an importance’s assessment</th>
<th>Regularity (measured by variances of climate topics
scaled frequencies in FSRs texts (Var (<em>F
climate/risk</em>))</th>
</tr>
</thead>
<tr><td>Intensity (measured by means of climate topics scaled frequencies in
FSRs texts (Mean (<em>F climate/risk</em>))</td>
<td>>0.04</td>
<td>0.04–0.01</td>
<td><0.01</td>
</tr>
<tr><td><0.085</td>
<td>very low</td>
<td>very low</td>
<td>Low</td>
</tr>
<tr><td>0.085–0.15</td>
<td>very low</td>
<td>intermediate</td>
<td>High</td>
</tr>
<tr><td>>0.15</td>
<td>low</td>
<td>intermediate</td>
<td>High</td>
</tr>
</table>
<p>Source: author’s own elaboration.</p>
<p>In this assessment the author assigned a slightly heavier weighting
to the regularity compared with the intensity. The reason is due to the
following: the study regarded the regularity of climate-related topics
in communication (by means of FSR) as indicative of climate-related
risks incorporated by central banks as an inherent part of financial
risks identified as substantial within their financial stability
framework. Such regularity sends a stronger signal to markets that
climate risk issues are “here for good” compared with the intensity,
which is measured as a mean of the relative frequency of climate topics
in FSRs . To determine the ranges, the author chose assessments obtained
for ECB publications as the benchmark for the rank ordering by assigning
the category of being very high. This choice was also justified by the
results of comparing the assessment obtained for the ECB with the
assessment obtained for the Global Financial Stability Report. The
former proved to have a higher level of intensity and regularity of
climate topics, which further confirms the ECB's status of a headliner
in promoting climate issues within the financial stability
framework.</p>
<h2>3. The
importance of climate considerations in central banks’ communication on
financial stability</h2>
<p>The findings indicated a rather low regularity of climate-related
topics in central banks’ communication on financial stability. Only in a
few cases from the sample could the regularity of climate-related topics
in FSR be regarded as quite steady (the EU, the Netherlands, Belgium and
Sweden). The rest of the banks in the sample communicated to markets on
climate-related issues fairly occasionally, in a ‘non-core’ part of
their FSR<a href="#fn6">6</a> which includes research articles or
special sections (e.g. Sveriges Riksbank, 2019) or exceptionally in a
special issue (e.g. Banque de France, 2019). However, the author
suggests that this irregularity could also be strengthened by the recent
dominance of financial stability considerations associated with the
COVID-19 crisis in central banks’ agendas. Table 1 summarises the
findings regarding the assessment of the importance of climate-related
topics in central banks’ communication on the financial stability with
reference to the objectives assigned by their current mandates, as well
as their involvement in climate initiatives.</p>
<p>The findings show that climate-related topics is an important and
regular part of the Financial Stability Reviews published by the ECB
from 2019 onwards, which significantly distinguishes the ECB from the
majority of central banks from the sample. The ECB mandate is
hierarchical, with price stability as the priority objective and with
the secondary remit to “support the general economic policies in the
Union with a view to contributing to the achievement of the objectives
of the Union” but “without prejudice to the objective of price
stability”. Since the net-zero transition became recently a strong
priority of the EU, the ECB’s secondary remit could be considered as a
support of the EU climate-change policy. The ECB involvement in climate
initiatives also seems to be systematic, which confirms the roadmap on
incorporating climate change considerations into the ECB's policy
framework presented in 2021. The author compared the findings for the
ECB with the assessment obtained for the Global Financial Stability
Report published by the IMF. The latter obtained a lower rank due to a
weaker regularity compared with FSRs published by the ECB.</p>
<p>A high regularity of climate-related topics in FSR publications were
also found for central banks of the Netherlands, Belgium, Sweden and
Romania. The first three have leading positions in country
sustainability ranking<a href="#fn7">7</a> (RobecoSAM, 2021) and their central
banks are characterised by their relatively greater involvement in
climate initiatives (particularly De Nederlandsche Bank, see Table
1).</p>
<p>The study’s findings on the assessment of the importance of
climate-related issues mostly overlap with the global country
sustainability ranking map – the better the sustainability performance,
the higher the importance achieved. There are however some exceptions,
e.g. Romania, where the importance of climate-related topics in the
central bank’s communication is very much ahead compared with the
country’s sustainability performance. This is probably linked with
Romania’s membership in the NGFS (less popular among central banks from
Central Europe compared with the Western Europe countries). In the case
of the United Kingdom, Denmark and Finland, this is contrary: the
importance due to the study’s assessment is low, while the
sustainability performance is rather high (especially for the Nordic
countries<a href="#fn8">8</a>). The unexpectedly low importance
obtained for the FSRs of the Bank of England contrasts with its actual
involvement in climate initiatives (see Table 1). The BoE has a
well-defined climate mission<a href="#fn9">9</a> and a developed
communication on climate-related considerations. The latter could be
probably an explanation for the low importance obtained for its FSR
publications – the BoE uses diverse channels other than FSR to
communicate with the markets about climate change implications for
financial stability and about its involvement in their addressing.</p>
<p>The very low importance obtained for the FSRs published by the
Federal Reserve was rather expected, for two reasons. First, the Federal
Reserve launched the FSR publishing only in 2018, while many central
banks were publishing their Financial Stability Reports long before the
financial crisis<a href="#fn10">10</a>. The initial phase of the
communication on financial stability, and the later outbreak of the
COVID-19 crisis shortly after their publication was launched, were not
favourable for the incorporation of climate risk during such a short and
intensive period. Second, climate change considerations were not among
government priorities during the Trump presidency, which led to a
weakening sustainability performance of the US. The role of the Federal
Reserve in the climate domain will rather stay limited to the existing
mandates, which was made clear by its Chairman, Jerome Powel during the
Green Swan Conference in 2021. This contrasts with the view of C.
Lagarde quoted earlier, emphasizing the need for a more concerted
involvement of central banks in addressing climate risk.</p>
<p>The study’s findings also indicate the very low importance of
climate-related topics for Central and Eastern Europe countries, namely
the Czech Republic, Hungary and Poland. This corresponds with their
weaker sustainability performance in the global ranking compared with
the Nordic and Western European countries; none of these countries
joined the NGFS as yet. The Czech Republic and Hungary are the only
countries from the sample, where ‘sustainable’ or ‘sustainability’ are
explicitly mentioned in mandates of their central banks in the secondary
remit.</p>
<h2>4. Conclusions</h2>
<p>In this study the author considered the regularity of climate-related
topics in central banks’ communication as indicative of climate-related
risks incorporated by them as an inherent part of financial risks within
their financial stability framework. The study considers that such
regularity gives a strong signal from central banks to the markets about
the significance of climate risks for the stability of the financial
system. The main finding indicates the rather low regularity of
climate-related topics in central banks’ communication on financial
stability. Only in a few cases from the sample could the regularity of
climate-related topics in FSR be regarded as quite steady. The findings
on the assessment of the importance of climate-related topics in central
banks’ communication mostly overlap with the global country
sustainability ranking map – the better the sustainability performance,
the higher the importance achieved (with some exceptions). The ECB leads
the ranking of central banks of the importance granted to
climate-related topics in their communication. The author argues that,
despite the more active role of central banks in addressing climate
risks observed recently, the generally low importance indicated by the
study contrasts with the high urgency of climate considerations for
financial stability nowadays. Extending the central banks’ mission by
including climate objectives, whether formally (by a reconsideration of
their mandates) or informally (through a consensus in the debate), could
facilitate their involvement in combatting the climate change.</p>
<p>References</p>
<p>Banque de France. (2019). Greening the financial system: the new
frontier. <em>Financial Stability Review</em>, June.</p>
<p>Bartholomew, L., & Diggle, P. (2021). Climate change and central
banks: The case for violating neutrality. VOX EU/CEPR, 12 August 2021.
Retrieved March, 2, 2021 from <a href="https://voxeu.org/article/climate-change-and-central-banks-case-violating-neutrality">https://voxeu.org/article/climate-change-and-central-banks-case-violating-neutrality</a></p>
<p>Board of Governors of the Federal Reserve System. (2020). Financial
Stability Report, November 2020. Washington: Board of Governors of the
Federal Reserve System.</p>
<p>Bolton, P. et al. (2020). <em>The Green Swan. Central banking and
financial stability in the age of climate change</em>. Basel: BIS.</p>
<p>Bolton, P., Kacperczyk, M., Hong, H., & Vives, X. (2021).
<em>Resilience of the financial system to natural disasters</em>.
London: CEPR.</p>
<p>Boneva, L., Ferrucci, G., & Mongelli, F. (2021). To be or not to
be “green”: how can monetary policy react to climate change?
<em>Occasional paper series</em>, (285), November.</p>
<p>Brunnermeier, M., & Landau, J.-P. (2020). Central banks and
climate change. VOX EU/CEPR, 15 January 2020. Retrieved March, 2, 2021
from <a href="https://voxeu.org/article/central-banks-and-climate-change">https://voxeu.org/article/central-banks-and-climate-change</a></p>
<h4>Carney,
M. (2015). Breaking the tragedy of the horizon – climate change and
financial stability. Speech at the Lloyd’s of London on September 29,
2015.</h4>
<p>Carstens, A. et al. (2021). Panel S “Central banks and climate
change: how to manage expectations, balance actions and communication
and contribute to coordinate with other important actors. Green Swan
Conference 2021, virtual conference by the Bank for International
Settlements, Bank of France, International Monetary Fund and Network for
Greening the Financial System, 2-4 June 2021. Retrieved March, 2, 2022
from https://www.youtube.com/watch?v=KqssyOR8t9s</p>
<p>Christophers, B. (2017). Climate change and financial instability:
risk disclosure and the problematics of neoliberal
governance. <em>Annals of the American Association of Geographers</em>,
<em>107</em>(5), 1108-1127.</p>
<p>Cihak, M. (2006). <em>How do central banks write on financial
stability</em>? (IMF Working Paper No. 06/163).</p>
<p>Cihak, M. et al. (2012). <em>Financial stability reports: What are
they good for</em>? (IMF Working Paper, Washington: IMF).</p>
<p>Dikau, S., & Volz, U. (2021). Central bank mandates,
sustainability objectives and the promotion of green finance.
<em>Ecological Economics</em>, <em>184</em>, June.</p>
<p>European Commission. (2018). Action Plan: Financing Sustainable
Growth. COM(2018) 97 final. Brussels.</p>
<p>IMF. (2020). The April 2020 Global Financial Stability Report: Online
Box 5.2. Assessing the Impact of Climate Change Physical Risk on the
Equity Risk Premium with a Long-Run Risk Model. Retrieved from
https://www.imf.org/-/media/Files/Publications/GFSR/2020/April/English/ch5.ashx</p>
<p>Kuroda, H. (2021). The Bank of Japan's strategy on climate change,
Speech (via webcast) by the Governor of the Bank of Japan, at the Japan
National Press Club, 27 July 2021. Retrieved October 30, 2022 from
https://www.bis.org/review/r210804d.htm</p>
<p>Monnin, P. (2018). <em>Central banks should reflect climate risks in
monetary policy operations</em>. (SUERF Policy Note, No 41).</p>
<p>NGFS. (2021). <em>Guide on climate-related disclosure for central
banks. December 2021. Technical Report</em>. Paris: NGFS.</p>
<p>Niedźwiedzinska, J. (2020). The mandates of central banks. Obserwator
finansowy, 23.11.2020. Retrieved March, 2, 2021 from <a href="https://www.obserwatorfinansowy.pl/in-english/macroeconomics/the-mandates-of-central-banks/">https://www.obserwatorfinansowy.pl/in-english/macroeconomics/the-mandates-of-central-banks/</a></p>
<p>Pereira da Silva, L. (2019). Research on climate-related risks and
financial stability: an ‘epistemological break’? Speech at the
conference of the Central Banks and Supervisors Network for Greening the
Financial System (NGFS), Paris, 17 April.</p>
<p>RobecoSAM. (2021). Country Sustainability Ranking Update – Summer
2021. Country Sustainability: Visibly harmed by Covid-19. Retrieved
March 9, 2022 from <a href="https://www.robeco.com/media/f/4/2/f42282992ab58a0390e1ab2d2199681e_202108-country-sustainability-ranking-us_tcm1010-31263.pdf">https://www.robeco.com/media/f/4/2/f42282992ab58a0390e1ab2d2199681e_202108-country-sustainability-ranking-us_tcm1010-31263.pdf</a></p>
<p>Sveriges Riksbank. (2019). <em>Financial Stability Report,
2019:2</em>. Stockholm: Sveriges Riksbank.</p>
<p>Table 1. Central banks’ objectives, their involvement in climate
initiatives and the importance of climate-related topics in their
communication on financial stability</p>
<table class="table table-bordered">
<colgroup>
<col></col>
<col></col>
<col></col>
<col></col>
<col></col>
<col></col>
</colgroup>
<thead>
<tr><th>Country </th>
<th>Primary objective</th>
<th>Secondary remits</th>
<th>NGFS membership</th>
<th>Other climate initiatives</th>
<th>Importance</th>
</tr>
</thead>
<tr><td>EU</td>
<td>price stability</td>
<td>Without prejudice to the objective of price stability support the
general economic policies in the Union with a view to contributing to
the achievement of the objectives of the Union</td>
<td>member (2019)</td>
<td>Climate change centre (2021) Roadmap on incorporating of climate
change considerations into ECB's policy framework (2021)</td>
<td>high</td>
</tr>
<tr><td>USA</td>
<td>price stability and full employment</td>
<td>_</td>
<td>member (2020)</td>
<td>_</td>
<td>very low</td>
</tr>
<tr><td>United Kingdom</td>
<td>price stability</td>
<td>The Financial Policy Committee’s primary objective is to protect and
enhance stability of the financial system of the UK.Subject to meeting
this, the FPC has a secondary objective to support the economic policy
of the Government. The Government’s economic policy objective is to
achieve strong, sustainable and balanced growth</td>
<td>founding member (2017)</td>
<td>Co-chair for the G20 Green Finance Study Group (2018); Launched
climate-stress-testing for UK banking sector (2018;Launched a report, A
framework for assessing financial impacts of physical climate change: a
practitioner’s aide for the General Insurance Sector' (2019); The BoE’s
climate-related financial disclosure 2020; Key Elements document
outlining the Biennial Exploratory Scenario on financial risks from
climate change (2021)</td>
<td>low</td>
</tr>
<tr><td>Spain</td>
<td>price stability</td>
<td>see EU</td>
<td>member (2018)</td>
<td>_</td>
<td>low</td>
</tr>
<tr><td>Italy</td>
<td>price stability</td>
<td>see EU</td>
<td>member (2019)</td>
<td>_</td>
<td>low</td>
</tr>
<tr><td>France</td>
<td>price stability</td>
<td>see EU</td>
<td>launched NGFS (2017)</td>
<td>_</td>
<td>intermediate</td>
</tr>
<tr><td>Netherlands</td>
<td>price stability</td>
<td>see EU</td>
<td>founding member (2017)</td>
<td>Sustainable Finance platform (2017); Signed up to UN principles for
Responsible Investments as first central bank (2018); Numerous
publication on climate-related topics</td>
<td>high</td>
</tr>
<tr><td>Belgium</td>
<td>price stability</td>
<td>see EU</td>
<td>member (2018)</td>
<td>_</td>
<td>high</td>
</tr>
<tr><td>Germany</td>
<td>price stability</td>
<td>see EU</td>
<td>founding member (2017)</td>
<td>_</td>
<td>intermediate</td>
</tr>
<tr><td>Sweeden</td>
<td>price stability, a safe and efficient payments system</td>
<td>_</td>
<td>member (2018)</td>
<td>Launched the consultation on the renewed sustainable finance
strategy (2020)</td>
<td>high</td>
</tr>
<tr><td>Finland</td>
<td>price stability</td>
<td>see EU</td>
<td>member (2018)</td>
<td>Responsible investment principles (2021)</td>
<td>very low</td>
</tr>
<tr><td>Denmark</td>
<td>price stability, financial stability, safe payments system</td>
<td>_</td>
<td>member (2019)</td>
<td> </td>
<td>very low</td>
</tr>
<tr><td>Poland</td>
<td>price stability</td>
<td>The basic objective of the activity of NBP shall be to maintain
price stability, while supporting the economic policy of the Government,
insofar as this does not constrain the pursuit of the basic objective of
NBP.</td>
<td>_</td>
<td>_</td>
<td>very low</td>
</tr>
<tr><td>Czech Republic</td>
<td>price stability and financial stability</td>
<td>Without prejudice to its primary objective, the Czech National Bank
shall support the general economic policies of the Government leading to
sustainable economic growth and the general economic policies in the
European Union</td>
<td>_</td>
<td>_</td>
<td>very low</td>
</tr>
<tr><td>Hungary</td>
<td>price stability</td>
<td>Without prejudice to its primary objective, the MNB shall support
the maintenance of the stability of the system of financial
intermediation, the enhancement of its resilience, its sustainable
contribution to economic growth; furthermore, the MNB shall support the
government’s economic policy and its policy related to environmental
sustainability, using instruments at its disposal.</td>
<td>member (2019)</td>
<td>Preferential capital requirement programme for credit institutions
to support the growth of green financial products and to improve the
energy efficiency of Hungarian building stock (2019) </td>
<td>
</td></tr>
<tr><td>Romania</td>
<td>price stability</td>
<td>Supports the general economic policy of the Government without
prejudice to its primary objective</td>
<td>member (2020)</td>
<td>_</td>
<td>high</td>
</tr>
</table>
<ol><li><p>Niedzwiedzinska (2020) identified as the more popular
secondary remit definitions: “economic policy support”, “balanced
economic growth”, “full employment” or “prosperity”, usually captured in
single mandates as those subordinated to the primary objective of price
stability. A mandate designed in such a way enables the central bank to
conduct monetary policy in a flexible manner.<a href="#fnref1">↩︎</a></p></li>
<li><p>The frequency of climate-related topics in FSR published
by central banks from this sample in 2016 was zero and in 2017 – mostly
around zero.<a href="#fnref2">↩︎</a></p></li>
<li><p>Belgium, France, Germany and Finland.<a href="#fnref3">↩︎</a></p></li>
<li><p>The collocation is important because it allows to avoid
any overcounting by including ‘climate’ used in a different context,
e.g. ‘business climate’.<a href="#fnref4">↩︎</a></p></li>
<li><p>“FSR is defined as a regular, self-contained central
bank publication that focuses on risk and exposure in the financial
system” (Cihak, 2006).<a href="#fnref5">↩︎</a></p></li>
<li><p>“There is an increasing differentiation between the
‘core’ part of an FSR (the sections that are repeated in every issue)
and its non-core part (called for instance Selected Issues, Special
Issues, or Articles). The core accounts for 73% of the reports on
average, but the cross-country variation is rather high: there are some
FSR that consist only of the core, while others contain only about 30%
of the core (the French FSR being an example of the latter) (Cihak,
2006).<a href="#fnref6">↩︎</a></p></li>
<li><p>Sweden tops the current ranking from 2021 (RobecoSAM,
2021).<a href="#fnref7">↩︎</a></p></li>
<li><p>“Continue to sustain their sustainability leadership in
the world” (RobecoSAM, 2021).<a href="#fnref8">↩︎</a></p></li>
<li><p>“Climate change creates financial risks and economic
consequences. These risks and consequences matter for our mission to
maintain monetary and financial stability”, <a href="https://www.bankofengland.co.uk/climate-change">https://www.bankofengland.co.uk/climate-change</a><a href="#fnref9">↩︎</a></p></li>
<li><p>According to Cihak et al. (2012), between 1996 and 2005
the number of central banks publishing FSR grew rapidly from 1 to about
50 across the world. In the following five years their number reached
about 80.<a href="#fnref10">↩︎</a></p></li>
</ol>