SUSTAINABLE FINANCIAL REGULATIONS AND CENTRAL BANK ACTIVITIES

The Sustainable Financial Regulations and Central Bank Activities (SUSREG) Tracker is an interactive online tool developed by WWF´s Greening Financial Regulation Initiative as part of a suite of tools to regularly assess how central banks, financial regulators and supervisors integrate climate, broader environmental and social considerations in their practices.

SUSREG AT A GLANCE

SUSREG covers

52

jurisdictions
Representing

89%

of global GDP
And

75%

of global GHG emissions
Including

13 of 17

most biodiversity-rich countries in the world

PROGRESS OVERVIEW
2021-2024

The graph below illustrates progress made on climate, environmental and social themes in central banking, banking supervision and insurance supervision activities between 2021 and 2024.

what is at stake

Average 69% decrease in population of...

...mammals, birds, amphibians, reptiles and fish monitored since 1970, according to WWF’s 2022 Living Planet Report

US$ 10-31T/y in ecosystem services lost

Between 1997 and 2011, due to land-cover change and land degradation worldwide, according to a 2019 OECD study.

1.2 billion people displaced by 2050

1.2 billion people face the risk of being displaced by 2050 due to the consequences of climate change and other environmental threats.

US$ 1T at risk from climate change

Reported to CDP by the 215 biggest global companies, with climate impacts likely to hit within the next 5 years.

US$ 320B total costs of global weather disasters in 2017

According to Munich Re, 2017 was the costliest year ever in terms of global weather disasters. Only US$130 billion of these costs were insured.

177 Leading Companies for a Net-Zero Recovery

These companies are calling for stronger policies to hold global temperature rise to within 1.5°C, in line with reaching net-zero emissions well before 2050. The initial group of 155 signatories represented a US$ 2.4T market capitalisation.

US$ 2.1T in sustainable business opportunities

Reported to CDP by the 215 biggest global companies, e.g. through demand for low emissions products and services (such as electric vehicles) and shifting consumer preferences.

96 countries committed to reversing biodiversity loss by 2030

The Leaders’ Pledge for Nature was signed at the UN Summit on Biodiversity in September 2020. It is endorsed by Heads of State and Government from 96 countries and the European Union, representing over 2 billion people and 39% of global GDP.

The crucial role of financial regulation and supervision

Alongside governments, central banks, financial regulators and supervisors are uniquely positioned to interfere in the lending and investment practices of financial institutions and disclosure practices. They can do this in various ways, from setting expectations, governance and risk management processes, mandating scenario analysis that quantify exposure to climate-related risks, to imposing specific disclosure requirements or setting differentiated capital requirements, to name a few.

They also play an important advocacy role, as they are becoming increasingly aware that climate change and nature loss are financial risks that can affect the entire financial system if not properly addressed.

While the specific mandates of central banks and financial regulators may vary across countries, key responsibilities usually include controlling inflation and money supply, ensuring financial stability and the safety and soundness of financial institutions. To do so, they can leverage on a wide range of tools and measures already available, from monetary policy to macroprudential and microprudential supervision.

WHO CAN BENEFIT FROM USING THE SUSREG TRACKER

Central banks, financial regulators and supervisors

  • To strengthen regulatory and supervisory practices by integrating E&S considerations into financial regulation  guidelines and monetary policy operations.
  • To benchmark against peers in key markets worldwide and align with best practices.

International financial standard-setters and initiatives

  • To understand and improve the level of ESG integration and disclosure against objectively defined indicators.
  • To identify and learn from progressive peers.
  • To engage with regulators and NGO´s on sustainable banking aspects.

Commercial banks and insurance companies

  • To understand the differences in regulatory and monetary policy frameworks between countries (and those affecting financial institutions in their portfolios).
  • To formulate an ESG strategy by taking into consideration other countries’ best practices in banking and insurance regulation.
  • To support and inform on engagement with government entities and policymakers.

Academics, think-tanks, and other non-governmental organisations

  • To better understand the differences in the financial regulation in key countries worldwide.
  • To assess the degree of integration of various E&S issues in financial regulation and central bank activities, and track progress.

About WWF´s Greening Financial Regulation Initiative (GFRI)

WWF´s Greening Financial Regulation Initiative (GFRi) directly engages with policy makers, central banks and financial supervisors on the urgent need to fully integrate climate, environmental, and social risks into mandates and operations, mainly through financial regulations and their supervision, as well as monetary policies. We help provide the necessary tools, scientific research, assessments, training and assistance to enhance the ambitions of the financial sector on the sustainable financial policy agenda. Contact: gfr@wwf.ch

By setting risk management rules and influencing financial markets with monetary policy operations, financial institutions have a unique opportunity to assess and mitigate risks to financial stability, and to redirect financial flows at a global scale.