WWF urges central banks in Africa to integrate green practices into financial regulation
![WWF urges central banks in Africa to integrate green practices into financial regulation](https://sustainabilityeconomicsnews.com/wp-content/uploads/2024/03/217.jpg)
Recent research by the WWF Sustainable Financial Regulations and Central Bank Activities (SUSREG) reveals that several central banks and financial supervisors are actively incorporating “green” practices into their financial regulation and supervision. This effort aims to integrate climate change and biodiversity considerations into daily decision-making processes to mitigate potential future financial risks related to climate change and environmental harm.
However, the SUSREG assessment indicates that countries such as Kenya, Morocco, South Africa, and Zambia have less than 50% alignment in climate and nature considerations in banking supervision, central banking, and insurance supervision.
In August 2023, the South African Reserve Bank launched a public consultation on climate-related risk practices and disclosures for banks and insurers, a significant step towards managing climate-related risks. Yet, there are still gaps in policy coverage in Kenya, Morocco, and Zambia concerning climate and environment-related risk management for banks and insurers, highlighting the need for expanded and strengthened regulations in these areas.
To enhance financial supervision, WWF urges African financial supervisors to fortify regulations addressing issues such as double materiality, requiring sector policies for high-risk sectors, setting targets for climate and nature, disclosing transition plans, and conducting climate scenario analysis and stress testing. Central banks are encouraged to integrate environmental and social considerations into their monetary policy, asset purchase programs, and reserve management.
WWF also calls for the implementation of a taxonomy system to prevent greenwashing and urges the disclosure of portfolio alignment with the taxonomy. Central banks, financial supervisors, and regulators are encouraged to publish transparent and measurable transition plans for a low-carbon and nature-positive economy.
Maud Abdelli, WWF’s GFRi lead, emphasizes the importance of action, stating, “Inaction or little action is fueling the dual climate-nature crisis,” and highlights the need for a full phase-out of fossil fuels and prioritization of protecting nature.
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