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A staggering 68 percent of all high-income countries have not adopted adequate climate and environmental banking supervision policies.
This is according to the Worldwide Fund for Nature (WWF) 2023 Sustainable Financial Regulations and Central Bank Activities (SUSREG) annual report.
The WWF 2023 SUSREG Report noted that this translated into four out of five world’s wealthiest countries.
It stated that nine out of 45 central banks have shown commendable progress in integrating climate risks into their monetary policy and central banking activities.
“Among the African countries covered namely Kenya, Morocco, South Africa, and Zambia, alignment to less than 50 percent of SUSREG’s assessment on climate and nature is observed in the areas of banking supervision, central banking, and insurance supervision,” the report revealed.
Meanwhile, in Zambia, it had been disclosed that there were currently no regulations or supervisory expectations in place regarding climate and environment-related risk management for banks and insurers.
WWF Zambia Country Director, Nachilala Nkombo, said addressing this gap could be crucial for fostering sustainability in the financial sector in Zambia.
‘‘WWF is a key stakeholder, expert and solution provider contributing to the greening financial regulation political debate,” Nkombo stated.
She emphasized that the fight against climate change needs collective effort among strategic institutions of course who come to the discussion table with the much needed expertise.
Nkombo said the needed expertise were in areas such as resource mobilization skills and technical savoir faire in drafting policies that support nature based solutions.
“For the longest time, it has been challenging to ascertain the potential effects of climate change on financial institutions, therefore it is essential such collaborative effort will create an opportunity to get accurate answers,” she stressed.
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Siti Kholifatul Rizkiah, lead author of the SUSREG Annual Report 2023 said properly managing financial risks stemming from environmental and social risks were an intrinsic part of central banks and financial supervisors mandates.
Rizkiah stated that it harnessed the power of the financial sector to safeguard the economy and underpins the foundation of a resilient financial system.
The SUSREG 2023 is the third assessment undertaken by WWF’s Greening Financial RegulationInitiative (GFRI) that evaluates how environmental and social risks are integrated in central banking, financial regulatory and supervision practices.
It targets central banks, financial standard setters and initiatives, insurance regulators and policy makers.
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