27/03/2023

Central Bank of Malta publishes its first Climate-Related Financial Disclosures Report

The Central Bank of Malta has today published its first climate-related financial disclosures report for its euro and foreign currency-denominated non-monetary policy portfolios (NMPPs).

Through this report, the Bank seeks to demonstrate, both the risks to these portfolios emanating from the transition to lower carbon intensive economies, as well as the impact these investments are having on the environment.

To increase transparency, the Bank has opted to publish both the mandatory Eurosystem disclosures and additional metrics to improve its assessment of the climate-related profile of our NMPPs. In recent years, the Bank has embarked on a diversification strategy to optimise its risk-adjusted returns, whilst taking sustainability considerations in its investment decisions. The share of green and sustainable bond holdings in its NMPP grew from around 2% in 2019 to 6% in 2022.

Going forward, the Bank will aim to align its NMPPs with the EU's target of achieving carbon neutrality by 2050 in line with the European Climate Law. In this regard, the Bank will seek to intensify its efforts to ensure that gradual progress is made towards this sustainability target, whilst considering its traditional investments objectives of capital preservation, liquidity, and return.

Climate change is one of the biggest existential threats to the global economy, financial system, ecosystem, and community. In the absence of swift and decisive action, the occurrence of increasingly extreme weather events will negatively impact economic growth, social conditions, and biodiversity.

The ECB and the Eurosystem national central banks have committed to start publishing their climate-related financial disclosures in line with the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).

As a member of the Central Banks and Supervisors Network for Greening the Financial System (NGFS), the Bank will continue to actively participate in its meetings and work streams as well as in the Eurosystem network covering climate related risks and disclosures. 

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