Eesti Pank joined the Network of Central Banks and Supervisors for Greening the Financial System (NGFS) in 2020. The network was created in December 2017 at the initiative of eight central banks and financial supervisors. The number of members of the NGFS has risen rapidly since then and it had 121 members in October 2022, among them all the central banks of the euro area, and 19 observers. Membership of the network is voluntary and it is a forum operating by consensus.

The goal of the NGFS is to help achieve the targets set in the Paris climate agreement. It does this by analysing and informing about the risks of environmental and climate change, sharing experience, and supporting scenario analysis for funding the transition to a low-carbon economy.

The NGFS issues recommendations that are not binding on its members but that steer all the central banks and financial supervisors and related partners to apply the necessary measures to promote an environmentally sustainable financial system.

The charter of the NGFS states that the NGFS Plenary is made up of all the NGFS members and observers. The plenary appoints the chair of the NGFS as proposed by the steering committee, approves the strategy and work programme of the NGFS, decides on admitting new members and observers, and handles other questions concerning the work of the NGFS. Eesti Pank is represented in the plenary by Deputy Governor Veiko Tali.

Eesti Pank staff are involved in the working groups and forums of the NGFS, which:

  • develop climate scenarios that take political assumptions into account and can be used for estimating the impact of climate change and the economy and financial system. These NGFS scenarios are used for estimating climate risk in the financial system
  • analyse how measures to mitigate climate change will affect the functioning of monetary policy, and are developing a framework that central banks could use to estimate how events will unfold under different climate risks
  • discuss approaches for increasing environmental friendliness through sustainable and responsible investment, publication of the climate and environmental data of central banks, and making the activities of central banks more sustainable
  • develop a common understanding and approach to the risks of the natural environment and how they affect financial stability. This is important for estimating the climate risks of the financial system and for sustainability reporting by businesses