EFFECTIVE SUPERVISION OF CLIMATE-RELATED FINANCIAL RISKS IN THE BANKING SECTOR

EFFECTIVE SUPERVISION OF CLIMATE-RELATED FINANCIAL RISKS IN THE BANKING SECTOR

SPEECH BY MR JOSE MARIA TRONCOSO PERERA, Head of Cooperation of the European Union to the Republic of Mauritius and to the Republic of Seychelles on the occasion of the opening session of the regional workshop on EFFECTIVE SUPERVISION OF CLIMATE-RELATED FINANCIAL RISKS IN THE BANKING SECTOR.

Mr Singh, AFRITAC South Coordinator and Director of Africa Training Institute
Colleagues from IMF and AFRITAC South
Participants from the Eastern, Southern African and Indian Ocean region
Distinguished guests
Ladies and Gentlemen

I am very pleased to be present with you today for the opening session of this regional workshop on effective supervision of climate-related financial risks in the banking sector. I would like to thank Mr Singh for his kind invitation to address you today. The Ambassador of the European Union would have like to be in your midst but he is currently on mission in Rodrigues.

EU-IMF cooperation for AFRITAC South

Now, many of you must be wondering why the European Union is one of the speakers for today's opening ceremony. Well, the reason is very simple: the EU and the IMF are close partners and we collaborate at various levels. The European Union is also the lead financier of AFRITAC South, along with other donors.

The objective of the collaboration between the European Union and the IMF through the EU's funding to AFRITAC South is to support sound macroeconomic, financial and fiscal policies in the region. This also contributes to enhanced regional integration and sustained economic growth in the 13 countries covered by AFRITAC South by harmonising standards and providing enabling conditions for economic growth

We have been working with AFRITAC South since the very start of its operation in Mauritius more than a decade ago. In 2023 the European Union and the IMF signed an agreement of 50 million euros to continue supporting IMF Regional Technical Assistance Centres like AFRITAC South.

I believe that AFRITAC South offers a unique opportunity to the European Union and other development partners to work with IMF for better economic management in the African region.

EFFECTIVE SUPERVISION OF CLIMATE-RELATED FINANCIAL RISKS IN THE BANKING SECTOR

Ladies and Gentlemen,

The regional seminar today focuses on how to strengthen the effective supervision of climate-related financial risks in the banking sector. The European Union has developed a few years ago an EU taxonomy for sustainable activities, commonly called the EU Green Deal, which is a cornerstone of the EU's sustainable finance framework.

Banks in the EU play a central role in the EU Green Taxonomy by both complying with its reporting requirements and utilizing it to direct lending toward environmentally sustainable activities.

The Taxonomy provides a common classification system to define these sustainable activities, helping banks measure their sustainability performance and align their lending strategies with EU Green Deal objectives.

Banks use the Taxonomy to guide their lending and investment decisions, channeling capital towards activities that meet its environmental criteria.
Banks also play a crucial role in financing the transition of carbon-intensive industries towards greener practices.

The Taxonomy framework helps banks develop sustainable business and transition plans to achieve goals like climate neutrality.

Ladies and Gentlemen,

Coming back to Mauritius, the EU strives to promote the EU Green Deal at national level. Under the SUNREF project with the Agence française de développement , which I am sure participants from Mauritius in this room today have heard of, we have delivered a number of sensitisation sessions on the EU Green Deal and its implications for Mauritius. This has contributed directly to the elaboration of a project with the Bank of Mauritius, aimed at providing technical assistance to the Central Bank of Mauritius (BOM) on climate and environmental-related risks.

This project aims at providing support for:

 integrating the impact of transitional financial climate risks, possibly in interaction with physical risks, to inform on the territory's vulnerability
 Integration of nature-related risks in the BOM's regulatory and supervisory framework
 Support for the BOM in filling the data gap, incl. climate metrics, to comply with international standards, especially EU standards.

Conclusion

Today's seminar organised by AFS is directly in line with the objectives of support we are giving to Mauritius and is a clear example of the complementarity between EU and IMF actions.

We therefore commend IMF for having organised this very topical seminar this week.

I thank all the organisers and all those who have worked hard behind the scene to make the regional seminar a success.

I wish you a fruitful workshop.

Bonne journée à tous et à toutes.