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Approach to sustainability

The Banco de Portugal, like most central banks and financial supervisors, has been incorporating environmental, social and corporate governance (ESG) sustainability factors into its policies and internal management.

Environmental concerns and, within these, climate change-related concerns have received greater attention from the Banco de Portugal and central banks in general, as they constitute an important source of risk to the balance sheet of financial institutions and also because of the potential impact on the conduct of monetary policy.

The Banco de Portugal’s approach to ESG sustainability is reflected in the Acting for Sustainability document, which provides an integrated view of the Bank’s position and sets out the guidelines and priorities that will steer its actions in the next four-year period, in line with the Strategic Plan for 2021-25.

Until 2025 the Banco de Portugal will pursue three focus areas to enhance ESG sustainability within its mandate:  

  • Area 1 – Integrating climate risks into the missions of the Banco de Portugal
  • Area 2 – Reinforcing ESG sustainability in internal management
  • Area 3 – Promoting ESG awareness among employees and external stakeholders.

The initiatives to be accomplished under each focus area will be defined every year and monitored by the Sub-Committee for Sustainability and Sustainable Finance, the structure that coordinates ESG sustainability-related work at the Banco de Portugal.

 

TIMELINE

Approach to sustainability - timeline
Institutional representation

Organisation

Group

Central Banks and Supervisors' Network for Greening the Financial System (NGFS)

Plenary

WSS - Workstream on Supervision

WSSDA - Workstream on Scenario Design and Analysis

WSMP - Workstream on Monetary Policy

WSNZ - Workstream on Net Zero for Central Banks

TFT - Task Force on Capacity Building and Training

TFN - Task Force on Biodiversity Loss and Nature-Related Risks

NLI - Network on Legal Issues

BIS

Advisory Committee on Green Bond Initiative

ECB

HLTF (High-Level Task Force on Climate Change-related SRI principles in non-monetary policy portfolios)

ECCF - Eurosystem Climate Change Forum

MOC - Monitoring Working Group (MWG) - Sustainable and Responsible Investment Task Force (SURI)

MOC-RMC Workstreams on Climate Change

GT Green ECB (Environmental Network of Central Banks)

Expert Group on Productivity - Climate Workstream

ECB / Supervisory Board

NCA Climate Risk Contact Group

EBA

SGSF - Subgroup on Sustainable Finance

Sustainable Finance Network;
Workstreams on the pillar 1 mandate: (i) Capital requirements

Sustainable Finance Network
Workstreams on the pillar 1 mandate: (ii) Systemic risk buffer, capital conservation buffer, countercyclical buffer

ESRB

ESRB Joint ATC-FSC work on climate risk monitoring (WS1 – Data and measurement)

ESRB Joint ATC-FSC work on climate risk monitoring (WS2 – Modelling climate risk and establishing a firmer base for policy instrument calibration)

ESRB Joint ATC-FSC work on climate risk monitoring (WS3 – Mapping a growing body of analytical findings to policy options)

Think Tank on Sustainable Finance

High-level format

Technical format

CNSF

Contact group for sustainability and sustainable finance.

Legislation and regulation

Country level

  • Law No 98/2021 of 31 December 2021; Climate Framework Law. (in Portuguese only)
  • Circular Letter No CC/2021/00000010 of the Banco de Portugal, of 15 April 2021; Establishes supervisory expectations on the management of climate and environmental-related risks [for the less significant institutions under its direct supervision]. (in Portuguese only)

 

European level

  • Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment; Taxonomy Regulation.
    Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and specifying the methodology to comply with that disclosure obligation; Article 8 Disclosures Delegated Act.
    Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives; Climate Delegated Act.
  • Regulation (EU) 2019/2089 of the European Parliament and of the Council of 27 November 2019 amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks; Climate Benchmarks Regulation.
  • Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector; Climate Disclosures Regulation.
  • Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups; Non-Financial Reporting Directive (NFRI).
News

[30.05.2022] Banco de Portugal publishes Responsible Investment Charter

[01.04.2022] NGFS discloses its annual report

[24.03.2022] NGFS discloses Statement on Nature-Related Financial Risks

[27.01.2022] Sustainability. Banco de Portugal presents vision and priorities for 2022-25

[14.12.2021] NGFS publishes Guide on climate-related disclosure for central banks

[03.11.2021] COP26. The Banco de Portugal publishes a Pledge on Climate Action

[26.10.2021] Climate-related and environmental risks. NGFS releases progress report on the guide for supervisors

[23.07.2021] The Banco de Portugal releases its first Sustainability Report

[08.06.2021] NGFS updates climate scenarios for forward-looking risk assessment

[26.05.2021] Financial sector. NGFS released Progress report on bridging data gaps

[15.04.2021] Banco de Portugal establishes supervisory expectations on the management of climate and environmental-related risks

[31.03.2021] NGFS discloses a report on sustainable finance market dynamics and a dashboard on scaling up green finance

[24.03.2021] NGFS publishes options to adapt monetary policy operations to climate change

[25.01.2021] Banco de Portugal participates in new BIS green bond fund

[16.12.2020] NGFS publishes documents on sustainable and responsible investment and on climate change and monetary policy operations

[10.09.2020] NGFS publishes documents on environmental risk analysis in the financial system

[05.03.2020] Banco de Portugal publishes commitment to sustainability and sustainable finance

[26.09.2019] Banco de Portugal takes part in BIS's ‘green bond fund’

[18.04.2019] The Central Banks and Supervisors Network for Greening the Financial System held its annual meeting (in Portuguese only)

[11.12.2018] Banco de Portugal joined the Central Banks and Supervisors Network for Greening the Financial System (in Portuguese only)

Speeches and interviews

[15.09.2022] Address by Director Luís Laginha de Sousa at the lunch of the ISEG Sustainable Finance Course – 4th edition

[06.05.2022] Address by Luís Laginha de Sousa at the ASWP/Serralves 2022 Conference – Smart Growth: o Papel da Economia Circular (in Portuguese only)

[08.04.2022] Opening address by Governor Mário Centeno on the 2nd day of the conference ‘Sustainability 20|30 – The future is being decided now’

[02.03.2022] Address by Luís Laginha de Sousa at the opening lunch of the ISEG Sustainable Finance course

[20.10.2021] Remarks by Director Luís Laginha de Sousa at the Euromed Webinar "What role for central banks in the crisis, from emergency decisions to green recovery?"

[30.09.2021] – Opening Address by Director Luís Laginha de Sousa at the “Sustainable Finance – Preserving ecosystems for future generations” conference

[15.09.2021] Address by Director Luís Laginha de Sousa at the "ESCB: Towards a Green and Digital Future? - 2nd Webinar organized for SCECBU’s Trade Union Members": "Central Banks and Environmental Sustainability"

[25.05.2021] Initial remarks by Director Luís Laginha de Sousa at the Conference on "Sustainable Financing: New Developments" organized under the Portuguese Presidency of the EU Council

[25.05.2021] Address by Director Luís Laginha de Sousa at the ISCTE Conference on Research for Sustainability (in Portuguese only)

[10.05.2021] Presentation by Pedro Duarte Neves, “Climate Change Stress Testing” for the course Macro-Prudential Policy: Implementing the Financial Stability Mandate, organised by the Central Banking Institute

[15.03.2021] Opening remarks by Governor Mário Centeno at the Joint Banco de Portugal and European Investment Bank Webinar "Investment, digitalization and green financing - The Portuguese case"

[30.09.2020] - Interview of the Network for Greening the Financial System with Director Luís Laginha de Sousa: "In conversation with..."

[15.09.2020] Opening Address by Director Luís Laginha de Sousa at the event “Sustainable Finance – Sharing experiences on green financial services” (in Portuguese only)

[06.03.2020] Interview with Director Luís Laginha de Sousa in the ECO newspaper (in Portuguese only)

[07.03.2019] Address by Director Luís Laginha de Sousa at the Green Financing Meeting between the Banco de Portugal and the delegation of Representatives of the Pan-Pearl River Delta, China (in Portuguese only) 

Research and Analyses

Macroeconomic research and analyses

[Jul 2022] On the aggregate and distributional effects of carbon taxation in Portugal

[Jan 2022] “Climate change and the economy: an introduction”, Bernardino Adão, António Antunes, Miguel Gouveia, Nuno Lourenço and João Valle e Azevedo, Occasional Papers, 01/2022 

[Jan 2022] “Energy mix and intensity in Portugal: Portraits from aggregate and firm-level data”, João Amador, Economic Studies, 01/2022

[Oct 2021] “Climate change and the economy”, Special Issue, Economic Bulletin, pp. 44-72“Assessment of the exposure of the Portuguese banking system to non-financial corporations sensitive to climate transition risks”, Ricardo Marques and Ana Margarida Carvalho, Occasional Papers 01/2021 

[Sep 2021] “Scraping, Renewable Technology Adoption and Growth”, Bernardino Adão, Borghan Narajabad and Ted Temzelides, Working Papers11/2021

[Nov 2020] “Climate change mitigation policies: Aggregate and distributional effects”, Tiago Cavalcanti, Zeina Hasna and Cezar Santos, Working Papers17/2020 

 

Financial stability and prudential supervision

[Jun 2021] "Avaliação da exposição do sistema bancário português a sociedades não financeiras sensíveis aos riscos climáticos de transição", Ricardo Marques e Ana Margarida Carvalho, Occasional Papers 01/2021 

[Apr 2021] Banco de Portugal establishes supervisory expectations on the management of climate and environmental-related risks

[Jun 2019] “Risks to financial stability resulting from climate change”, Financial Stability Report, Box 2, pp. 115-117

Reduction of the ecological footprint

The Banco de Portugal has improved the energy efficiency of its operations and reduced its carbon footprint. 

In 2020, a new energy contract was concluded for all the Bank’s buildings, except the regional delegations of Azores and Madeira, which provides for the supply of 100% renewable energy. 

 

Responsible investment

[Fev 2021] Eurosystem agrees on common stance for climate change-related sustainable investments in non-monetary policy portfolios

[Jan 2021] Banco de Portugal participates in new BIS green bond fund

[Sep 2019] Banco de Portugal takes part in BIS's ‘green bond fund’

Sustainability report