Until very recently, combating climate change was seen as something outside our remit. Following the 2015 Paris Agreement, the fight against climate change has taken on a more specific form and greater momentum, with a term being set for fulfilment of the 2030 Agenda. Coinciding with the signing of the Paris Agreement, the role of finance in combating climate change has moved onto the agenda of international financial organisations. This change has come about exponentially. New initiatives emerge almost daily, under the aegis of the G20, the United Nations, the Financial Stability Board or the OECD. At central banks, I would highlight the work of the Network for Greening the Financial System (NGFS), a network of supervisors and central banks created in December 2017. In a short space of time, the number of members has increased from eight to 46, along with eight observers. We might wonder what exactly has changed since 2015 to warrant this sudden interest on the part of banking regulators and supervisors in climate risks. This may be summed up in two conclusions, expressed in the form of two international initiatives:   First, in 2015, the Paris Agreement stressed for the first time the importance of the financial system in efficiently channelling the resources needed to transform the economy towards a sustainable model.   Second, the first NGFS report, published in 2018, stated that climate-related risks were a source of financial risk, and that supervisors and central banks should shore up the system’s solvency in the face of these risks.
I trust this regulation will be approved shortly, in accordance with the objectives set by the new European Commission, and that this taxonomy will finally provide us with a common definition of what may be considered “environmental” or “sustainable”. The role of supervisors – external initiatives As supervisors, we clearly have responsibility for urging on these changes. We need to be proactive; in particular, we need to enter into a dialogue with banks to analyse how they are incorporating environmental risk. At the Banco de España we are intent on pressing ahead with this dialogue. Let me mention just a few examples of recent steps taken. To assess the level of preparation for environmental risk, we conducted a survey among the 12 banks directly supervised by the SSM and several other smaller banks. Subsequently we discussed the survey findings with the participating banks, conveying to them the importance of this issue and the supervisory expectations. According to the survey findings, many banks that were already explicitly considering environmental risk have included it in their social responsibility areas. Almost all have a team dedicated exclusively to Sustainable Finance and some also indicate that they have established specific committees, reporting in some cases to the Area General Manager or Corporate Secretary and in others directly to the Board of Directors. 4  In general, the Green Bond Principles are updated once a year, to reflect the latest market developments.