Emerging regulatory strategies on climate-related risks – a case study of the central banks in Central and Southeast Europe

Although the emerging energy crisis and soaring inflation have slowed down initiatives undertaken to promote the recognition of climate-related risks in the mandates of central banks, central bankers around the world have understood that climate-related risks are a challenge to financial stability and are slowly adjusting their mandates. This paper aims to contribute to the emerging literature on modalities of incorporation of ‘green’ factors into the policy toolboxes of central banks, proposing a classification of informational tools into five subgroups, and presenting landmark examples of climate change initiatives on the policy agenda of the central banks in new EU Member States and countries aspiring to join the EU, located in Central and Southeast Europe. This paper briefly outlines the drivers of climate-related risk recognition by central banks, as well as emerging strategies that include climate-related risks in the regulatory and supervisory frameworks. Given that the dominant public policy instruments – not only in the countries of Central and Southeast Europe, but also at the global level – are voluntary and mandatory instruments of information regulation, the paper presents an analysis of the informational tools contained in the published strategic and reporting documents of the central banks. The paper presents landmark examples of climate change initiatives on the policy agenda of the central banks in CEE and SEE, from central bank declarations and pledges, dedicated programmes, analytical commentaries and reports, to supervisory expectations based on non-binding guidelines, and formalised disclosure of climate risk exposure and risk management, concluding that more intrusive policy tools to mitigate climate risks in the prudential framework and ‘greening’ their monetary policy are introduced by a small number of central banks in the observed region.