Regulatory News

Central Bank of Ireland hosts inaugural meeting of the Climate Forum and publishes Sustainable Investment Charter

Central Bank of Ireland

  • Climate Forum will meet twice yearly and brings together climate change experts, industry representative bodies, regulated firms, and Central Bank representatives.
  • Central Bank also publishes its first Sustainable Investment Charter.
  • Charter provides a guide to apply sustainable investment principles to the Central Bank’s investment assets.

The Central Bank of Ireland has hosted the inaugural meeting of the Climate Risk and Sustainable Finance Forum. The meeting, which took place on Wednesday 29 June 2022 in a hybrid format, follows a commitment by the Central Bank to establish a Climate Forum in November 2021, and a call for interest in participation published in April 2022. 

The Forum is chaired by Deputy Governor Sharon Donnery. It will be a consultative forum for building a shared approach to the understanding and management of the risks and opportunities posed by climate change to the financial system. Its membership comprises climate change experts, representative bodies, regulated firms and representatives from the Central Bank. A full list of participants can be found here

The Climate Forum will meet twice a year with minutes of each meeting to be published within four weeks of the meeting taking place.

Separately, the Central Bank has today also published its inaugural Sustainable Investment Charter. The Charter has been developed by the Central Bank as the latest in a series of measures to embed climate change and sustainability considerations into its own operations. It will provide a guide to apply sustainable investment principles to the Central Bank’s investment assets. 

In this first iteration of the Charter, the approach to sustainable investment will focus on Exclusion, Impact Investing, and Environmental, Social, and Governance (ESG) Integration as core strategies: 

  • The Charter excludes certain companies and/or sectors from the Central Bank’s investment universe. The Central Bank will not knowingly invest in any company that is involved in the manufacture of prohibited/controversial weapons as defined in relevant international treaties, in the tobacco industry or in coal companies. The Central Bank further expects investee companies to comply with the principles of corporate sustainability as defined in the UN Global Compact (UN GC).
  • The Charter aims to generate an intentional and quantifiable positive impact alongside financial returns. The Central Bank allocates a portion of its investment assets to green/sustainable bonds.
  • The Central Bank will include ESG factors in its investments.  

The Charter further sets out that the Central Bank will report annually on progress made in its commitment to incorporating sustainable investment principles. As of early 2023, it will disclose climate change-related metrics of the investment assets.

Commenting on today’s announcements, Deputy Governor Sharon Donnery said, “I am delighted to host the inaugural meeting of the Climate Forum today. This initiative provides a unique opportunity for the Central Bank, industry, climate change experts, and other stakeholders to share their expertise and insights on how we can build a common approach to address climate risks in the financial system. This is the responsibility of everyone in the financial system and we are strongly committed to furthering this very important work.

“Today we are also publishing the Central Bank’s first Sustainable Investment Charter. This landmark publication reflects our ongoing efforts to incorporate climate change and sustainability considerations into our operations as a central bank. It will provide an overarching guide as we seek to embed these considerations across our mandate. We are committed to reporting openly and transparently on this work and, to this end, will publish climate change-related metrics of our investment assets from 2023 onwards.”

 

Notes to Editor

The Central Bank of Ireland currently holds c. €17.4bn of investment assets; mostly invested in government bonds and other high-quality fixed income securities.

The Central Bank also manages a share of the ECB’s US dollar reserve assets.

The Sustainable Investment Charter will form part of the Central Bank’s discretionary Investment Policy Framework, which is set by the Central Bank Commission. All monetary policy-related assets, as well as the ECB Foreign Reserves that are managed by the Central Bank in its role as a member of the Eurosystem in a decentralised manner, and holdings of Special Drawing Rights allocated by the International Monetary Fund, are outside the scope of the Charter.

The United Nations Global Compact is a non-binding UN pact to encourage businesses and firms worldwide to adopt sustainable and socially responsible policies, and to report on their implementation.

Original Article Here

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