In the last ten years, the regulatory community has had its eyes on repairing the financial system, identifying loopholes and gaps to prevent another international banking crisis from happening. Amidst this, another crisis of a different nature began to blossom: the long-term challenge of ensuring climate resilience of the financial system and considerations on what planet we leave behind for generations to come.

The tempo of climate change is alarming. Whereas it may seem that this is a worn-out cliché, the issue itself is not. In October of 2018, William Nordhaus was awarded the Nobel Prize for Economics for work on economic modelling of climate change, recognizing the importance of interaction between climate change and human economic activities. By recognizing that climate change is no longer an economically overlooked topic raised by non-profit organisations and activists in obscurity, Nordhaus demonstrated that environmental issues extend beyond the private sector. As “climate change”, “sustainability” “ESG” lost the status of mere buzzwords, central banks realized that environmental issues need to be a core component of their decision-making. The motivation for this is not one-dimensional: central banks need to understand the impact of climate change on financial stability and monetary policy, support the green transition through their policies and assess how climate change impacts the financial sector. However, just as they shape their existing policies based on cold, harsh data provided by financial institutions, banks need to leverage data for effective green finance policies. Not only that, central banks need to shape these green policies based on a common understanding of the data that is given to them.