Launched in 2017, this network, which I am honoured to have chaired from the beginning, brings together central banks and financial supervisors to track supervisory developments and develop climate scenarios for central banks and supervisors. The network also explores paths to scale up green finance and monitor its market dynamics, thereby bridging data gaps and coordinating research in the fields of climaterelated and environmental risks. I am happy to mention that the NGFS has just welcomed its ninetieth member. The Basel Committee’s Task Force on Climate-related Financial Risks will continue working on the further integration of climate-related financial risks into the Basel framework and expectations. To help address the remaining challenges in terms of measuring climate-related financial risks, the ECB is working closely with the European Banking Authority (EBA) on the management and supervision of ESG risks. We have also provided our input to the European Commission’s EU taxonomy for sustainable activities and its non-financial reporting directive 4/5  BIS central bankers' speeches  (NFRD), which requires large European companies to disclose information on their policies in areas such as environmental protection and social responsibility. In particular, the ECB supports the ongoing work by the Basel Committee and the Financial Stability Board (FSB) on effective and consistent regulatory and supervisory approaches for dealing with climate risks. Conclusion Let me conclude. When dealing with the risks arising from climate change, we must be forward-looking, comprehensive and strategic. But we must also be swift.
In stress test parlance: this year’s test is “topdown”, whereas next year’s is “bottom-up”. As banks become better prepared to face the risks posed by climate change, they need to be led by people who are also better prepared to deal with these topics. When assessing the suitability of prospective members of the management body of banks, knowledge and experience of climate-related and environmental risks will be among the areas of general banking experience against which suitability will be assessed. Finally, we will seek to include an understanding of climate-related and environmental risks as a specific area of expertise within the collective suitability of a bank board. An environmental risk that is intimately connected to climate change, but also constitutes a risk in itself, is the loss of biodiversity. In our Guide on climate-related and environmental risks we single out biodiversity loss as one of the drivers of both physical and transition risk. It is becoming ever clearer that beyond climate-related risks, biodiversity loss could also be a source of material financial risks.9 More research needs to be done.10 At the ECB, we will follow these developments closely – and we encourage banks to do the same. Integrating international networks and European initiatives Much like the EBRD, the ECB is also part of global initiatives which promote international cooperation on joint solutions for climate change. Most prominently, the ECB is a member of the NGFS.