Pablo Hernández de Cos: Remarks – Panel "What are the policies currently considered by central banks, regulators and supervisors – and their challenges – to address climate change?"

Remarks by Mr Pablo Hernández de Cos, Governor of the Bank of Spain and Chair of the Basel Committee on Banking Supervision, for the panel discussion on "What are the policies currently considered by central banks, regulators and supervisors – and their challenges – to address climate change?", Green Swan 2021 Global Virtual Conference, 4 June 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Many thanks, Morgan, and thank you also to the BIS, Banque de France, IMF and NGFS for the invitation to take part in this panel.

As you perfectly know in both my capacity as Governor of the Bank of Spain and member of the Governing Council of the ECB, and as Chair of the Basel Committee I can say that the topic of climate-related financial risks is one of the top priorities over the coming years.

In both cases, I think the right way to frame the issue is to take our mandates as the starting point.

In the case of the Basel Committee, as the primary global standard setter for banks, our mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability.

If we combine this mandate with the fact that, as has been discussed in various sessions during this conference, climate change poses risks to the financial sector (physical and transition risks) that can be significant in magnitude and therefore can impact financial stability at the global level, one should conclude there is a need for supervisors, regulators and, of course, the Basel Committee to act.

In particular, we need to guarantee that individual banks and the banking system as a whole are adequately prepared to identify, measure and mitigate climate-related financial risks. This is the approach we are following at the Basel Committee level.

Put differently, our work is motivated by protecting banks from climate change, and not by changing the climate itself, where other measures outside the toolkit of regulators and supervisors are needed.

Although, of course, achieving our goal will in turn contribute towards meeting broader objectives related to climate change, such as the COP 21 Paris Agreement.