G20 Virtual Roundtable: Regulators' Perspectives on Climate Risks and Sustainable Finance in Emerging Economies

There are growing concerns from central banks, finance ministries and financial regulators about the physical and transition risks associated with climate change, as well as increasing appetite to enhance the volume of finance flowing to promising green sectors, assets and activities. These views are shared by frontrunning financial institutions and corporates, which are eager for clear policies and regulatory guidance to enable risk management and enhance investor certainty. Other stakeholders such as credit rating agencies and assurance companies would also benefit from policy certainty and standardised tools to assess the climate-related performance of firms.

All of these financial sector stakeholders need a locally-specific evidence base and capacity building to ensure that they are able to effectively address climate-related financial risks and seize climate-related financial opportunities. No country is fully prepared for the impacts of climate change, but emerging and developing economies will arguably need more support to enhance the resilience of their financial systems.

As articulated in the Chair’s Summary from the 1st G20 Finance Ministers and Central Bank Governors Meeting under the Indian G20 Presidency, central banks remain strongly committed to achieving price stability, in line with their respective mandates. Given the macroeconomic risks stemming from climate change and transition policies, participants of that first meeting reiterated their appetite for recommendations that – in line with country-specific needs and circumstances –scale up capacity building and technical assistance in sustainable finance.

Building on the recent G20 paper led by India’s Ministry of Finance, this virtual event will respond to that demand. Participants will explore priorities and steps to build the relevant capabilities of financial supervisors and regulators in emerging economies. The event will be held in advance of the 3rd meeting of the G20 Finance Ministers and Central Bank Governors (FMCBG), taking place in July, under India’s G20 Presidency. It will provide the evidence and assemble the expertise necessary to craft and test specific asks around the capacity-building needs of central bankers in emerging economies in the face of climate-related risks.