Central bank mandates, sustainability objectives and the promotion of green finance

This article examines how addressing climate-related risks and supporting mitigation and adaptation policies fit into central bank mandates. We conduct an analysis of mandates and objectives using the IMF?s Central Bank Legislation Database and compare these to sustainability-related policies central banks have adopted in practice. Out of 135 central banks, only 12% have explicit sustainability mandates, while 40% are mandated to support the government?s policy priorities, which mostly include sustainability goals. However, given that climate risks can directly affect central banks? traditional core responsibilities, all institutions ought to incorporate climaterelated physical and transition risks into their policy frameworks to safeguard macro-financial stability.

Automated summary

The article explores how central banks address climate-related risks and support mitigation and adaptation policies. Research shows that only a small percentage of central banks have explicit sustainability mandates, but the majority are mandated to support government sustainability goals. Therefore, central banks should incorporate climate risks into their policy frameworks to safeguard macro-financial stability.