Integrating climate-related risks into micro-supervision This is an ambitious but complex task, on which progress has been made in many countries. Looking at the potential courses of action for supervisors, I believe that our main priority should be the disclosure of existing exposures in the financial sector, what I usually call “the snapshot of risks”. A number of supervisors have paved the way, including the DNB, the Bank of England/PRA and the French supervisory authority (ACPR). The ACPR published last week a second report on the exposures of French banks and insurers to climate risks. This report gives a clearer view on climate risks and opportunities: asset exposures of financial firms to physical risks remains non-material in France  thanks to investments in very low risk zones; banks’ exposures to transitionrelated risks were slightly reduced between 2015 and 2017 and now represent roughly 12% of credit risk’s exposures at default. Our supervisor also has a clearer view on the blind spots in the risk management framework, which must be addressed: executive bodies are committed to embracing further climate risks at the highest level of decision-making but the degree of implication across the French financial sector is still heterogeneous; the granularity of the analysis provided by banks and insurance companies is not sufficient. This step should be widely promoted among NGFS members, who, I believe, need to leverage best practices throughout its membership. I therefore very much welcome the supervisory handbook that will be prepared as a NGFS technical deliverable for 2019-20. b.
Integrating sustainability factors into own-portfolio management Central banks must send the right signal and lead by example in their investment and disclosure policies. The DNB has signed up to the UN Principles for Responsible Investment. Norges Bank, which manages the Norwegian sovereign wealth fund, has advocated a diversification of the portfolio and is implementing a divestment strategy dedicated to selling off some oil and gas stocks. We, at the Banque de France, adopted in March last year a Charter on Responsible Investment for the management of our own funds and our pension portfolios: this means allocating them to socially and environmentally responsible investment funds. With respect to disclosure, in March 2019 we were the first central bank to publish our climate-related risks’ exposures. We are also working to further align our reporting with a TCFD-like approach that would fit the specificities of central banks. We trust our experience will be useful to the NGFS membership in defining some best practices as far ESG investment for central banks is concerned. We can be proud of what we have achieved in 16 months, but it is “time to roll up our sleeves”: the merciless perspective of a more than 2°C world requires us to strive to do better and to do it now. Developing practical solutions now tops the agenda of the NGFS “Season 2”. II. The road ahead for central banks/supervisors and other players too a. Disclosures and taxonomies, two faces of the same coin We are currently facing a chicken and egg dilemma.