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LatAm regulators to launch NGFS-backed sustainability group

Network has identified policy development and ESG disclosure as key priorities

Financial regulators from Latin America and the Caribbean will today launch a group dedicated to supporting the development of national sustainable finance strategies and rules in the region.

The Network of Regulators for Sustainable Development (REDES) is an initiative of the Inter-American Development Bank, and is backed by the high-profile central banking group the Network for Greening the Financial System (NGFS) and the Association of Banking Supervisors of the Americas. Its members are yet to be confirmed. 

According to statements from the new body, there is a pressing need for regulators to address ESG misconduct which “can hurt the performance of financial corporations due to exposures on credit, legal, market, operational and reputational risks”.

Aside from policy development, REDES will seek to improve the disclosure of sustainability-related financial information among member states and serve as a forum for regulators to better understand “the challenges posed by financial risks and opportunities stemming from climate change, environmental degradation, governance, and social issues”.

In addition, it will explore measures to strengthen the sustainability-related analytical capabilities of regulators, which may include the development of new instruments and tools to support assessments of financial risks.

The launch event, which is scheduled for later today, will be attended by Morgan Després, Director of Strategy at Banque de France and head of the NGFS Secretariat; Tajinder Singh, Secretary General of global regulatory body IOSCO; and representatives from the central banks of Chile, Brazil and Honduras. 

Separately, the European Central Bank revealed earlier this week that roughly a third of bank corporate loan books in the EU are exposed to businesses facing acute physical risks from climate change based on a qualitative study of risks to financial stability in the Eurozone. It noted that 70% of this exposure was concentrated among 25 major EU banks.