Recommendations for central banks and supervisory authorities

In 2021, the NGFS identified 9 policy options that could be chosen by central banks to align their monetary policy with climate objectives.^[8]

The NGFS work is currently organised around 4 workstreams (WS) and 2 task forces (TF):

• WS “Supervision”, chaired by Mr Tolga Yalkin from the Office of the Superintendent of Financial Institutions
• WS “Scenario Design and Analysis”, chaired by Mr Livio Stracca from the European Central Bank
• WS “Monetary Policy”, chaired by Mr James Talbot from the Bank of England
• WS “Net Zero for Central Banks”, co-chaired by Mr Paolo Angelini from the Bank of Italy and Ms Simone Robbers from the Reserve Bank of New Zealand

• TF “Nature-Related Risks”, co-chaired by Ms Emmanuelle Assouan from the Bank of France and Ms Saskia de Vries from De Nederlandsche Bank
• TF “Capacity Building and Training”, co-chaired by Ms Madelena Mohamed from the Central Bank of Malaysia and Mr Jeffery Yong from the Bank for International Settlements

Climate scenarios

In June 2020, the NGFS presented its climate scenarios as a common baseline for analysing climate risks to the economy and the financial system. Expanded and updated data were published in the two subsequent years. The scenarios are based on the three integrated assessment models REMIND-MAgPIE (Potsdam Institute for Climate Impact Research), GCAM (University of Maryland) and MESSAGEix-GLOBIOM (International Institute for Applied Systems Analysis). Their results were fed into the NiGEM model (National Institute of Economic and Social Research) to conduct further macroeconomic analyses on inflation or unemployment. In addition, climate data provided by Climate Analytics and the ETH Zurich are published.^{[9] [10] [11][12][13]}

The following six scenarios were examined: "Current Policies" considers only already implemented climate policies, while "NDCs" assumes that the voluntary pledges of Nationally Determined Contributions are met. "Below 2°C" assumes that a two-degree target in line with the Paris Agreement will be met, while "Net Zero 2050" assumes a 1.5-degree target will be achieved through early, globally coordinated climate policies. "Delayed Transition" assumes tighter climate policies only from 2030, while "Divergent Net Zero" envisages regionally and sectorally different climate adaptation.^[11]