RBNZ Reviewing Reserves Portfolio As Part Of Emissions Reduction Plan
- Published on
- 28 Oct 2020, 03:55 PM
By Sophia Rodrigues
The Reserve Bank of New Zealand is reviewing its reserves portfolio as part of a plan to reduce its carbon emissions, Governor Adrian Orr said Wednesday.
Orr made the comments in a speech at the Pacific Ocean Pacific Climate Conference on the topic, “Progressing Climate Action by Driving Transformational Change.”
Earlier this month, the RBNZ reported its verified carbon footprint for the first time in the Annual Report for 2020. It showed direct emissions at 3,354 tonnes of carbon dioxide equivalent.
Transportation of currency was the single largest source of RBNZ’s measured emissions at 58%, followed by business travel at 24%.
The carbon footprint, however, didn’t include RBNZ’s investments which could potentially dwarf all other emissions sources. Such investments include liquid, high-grade supranational and sovereign debt. The guidelines on the inclusion and measurement are at a formative stage and the current data has high uncertainty, the RBNZ said.
The RBNZ is working towards refining the data and considering whether it would support sustainability through its investment and how it can develop emission-reduction plan.
“We are getting our own house in order,” Orr said.
Orr said the RBNZ is also building its climate expertise and awareness through training and development for all staff, and building its technical expertise.
“We are stepping up our supervision of climate-related risks for banks and insurers. We have recently completed training our supervisors in climate-related risks and are integrating climate risks into our supervision frameworks,” he said.
Orr said climate change and its associated risks are a direct challenge to financial stability. The risks are material, but they are extremely difficult to identify, price, allocate and manage with accuracy, he added.
In the May 2020 Financial Stability Report, the RBNZ reminded that the medium- to long-term risks to financial institutions from climate change remain relevant through and well beyond the current Covid-19 crisis.