Zambia lacks regulations on climate-related risk management for banks – WWF

• A staggering 68% of all high-income countries have not adopted adequate climate and environmental banking supervision policies.
• This translates into four out of five world’s wealthiest countries.
• Addressing this gap could be crucial for fostering sustainability in the financial sector in Zambia.

WWF’s Sustainable Financial Regulation and Central Bank Activities (SUSREG) assessment Report for 2023 has revealed that Zambia has no regulations or supervisory expectations in place on climate and environment-related risk management for banks and insurers.
According to the Report, a staggering 68% of all high-income countries have not adopted adequate climate and environmental banking supervision policies, translating into four out of five world’s wealthiest countries, while nine out of 45 central banks have shown commendable progress in integrating climate risks into their monetary policy and central banking activities.
And reacting to the findings, WWF Zambia Country Director Nachilala Nkombo stated that addressing this gap could be crucial for fostering sustainability in the financial sector in Zambia, adding that the organization is a key stakeholder, expert and solution provider contributing to the greening financial regulation political debate.
Ms. Nkombo said the fight against climate change needs collective effort among strategic institutions to ascertain the potential effects of the scourge on financial institutions.
“For the longest time, it has been challenging to ascertain the potential effects of climate change on financial institutions; therefore it is essential such collaborative effort will create an opportunity to get accurate answers.”
“We remain equal to the task by offering financial institutions, international financial standard-setters and initiatives, and insurance companies timely and accurate feedback, due to their key role in ensuring financial market sustainability and price stability, including their influence in the promotion of an overall healthy economy,” Ms. Nkombo stated.
Meanwhile, lead author of the SUSREG Annual Report 2023, Siti Kholifatul Rizkiah, said properly managing financial risks stemming from environmental and social risks are an intrinsic part of central banks and financial supervisors’ mandates.
The report has further revealed that among the African countries covered which include Kenya, Morocco, South Africa, and Zambia, alignment to less than 50% of Sustainable Financial Regulation and Central Bank Activities’ assessment on climate and nature is observed in the areas of banking supervision, central banking, and insurance supervision.
The SUSREG 2023 is the third assessment undertaken by WWF’s Greening Financial Regulation Initiative (GFRI) that evaluates how environmental and social risks are integrated in central banking, financial regulatory and supervision practices.
The assessment targets central banks, financial standard setters and initiatives, insurance regulators and policy makers.

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