On 23 July 2019, the Network for Greening the Financial System (NGFS) published a technical supplement to its first comprehensive report on climate change as a source of financial risk which is aimed at central banks and financial supervisors. The paper provides an analysis of two types of risks that arise from climate change: physical and transitional, both of which could manifest as risks to the financial system if there is a disorderly transition to a low-greenhouse economy. In its key findings, the NGFS concludes that central banks and supervisors need to categorise these risks more clearly to assess their impact on macroeconomic variables that are central in the monetary frameworks; and potential to generate financial instability.
