Climate change is a clear and considerable sustainability issue with long-term consequences and implications. It poses risks to the economy and financial sector of the countries globally. The National Bank of Georgia is actively working on analyzing climate-related risks and supporting the transition to sustainable finance by incorporating climate change considerations into NBG’s Sustainable Finance Framework. By doing so, the NBG supports its mandate of maintaining financial stability.

 

Under the NBG’s Sustainable Finance Framework the main objectives related to climate change include:

 

Analyzing the impact of climate change on Georgia’s economy and financial sector. This includes assessing physical and transition risks that could have a material effect on the financial stability of the financial system and result in financial losses. Climate scenario analysis and climate stress-testing are also part of the process.

 

Support identification and mitigation of climate-related risks. To strengthen the financial sector’s resilience to the abovementioned risks it is imperative to incorporate environmental, social and governance (ESG) factors into investment and financial decision-making. Climate change is at the heart of environmental factors that need to be taken into account to support the transition to a more sustainable economy. Thus, ensuring proper integration of ESG considerations, including climate-related risks by financial institutions is a significant part of the NBG’s Sustainable Finance Framework.