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Climate Change, Price and Financial Stability

Climate change affects both price levels and the stability of the financial system. It poses risks related to the ability of the economy and financial sector to adapt to a changing environment. The National Bank of Slovakia therefore monitors and analyzes these impacts and risks in accordance with its mandate. It subsequently takes the findings and results of these analyses into account while performing its mandatory functions.

Hlavné oblasti

Monetary Policy and Climate Change

Financial Stability and Climate Change

Sustainable Reserve Management

Sustainable finance and ESG

Monetary Policy

Physical and transition risks related to climate change affect inflation and other key economic indicators through multiple channels. In pursuing price stability, it is therefore essential to analyze these connections and to incorporate the resulting analytical findings into the preparation of macroeconomic forecasts. The NBS undertakes such analyses and integrates them into our forecasting and policy assessment framework. Given the structural characteristics of the Slovak economy, these issues are of particular relevance. At the same time, they are communicated at the Eurosystem level, thereby contributing to a more informed and efficient monetary policy decision-making. Further information on the links between climate-related physical and transition risks and price stability is available on the Monetary Policy and Climate Change subpage.

Financial Stability

Physical and transition risks arising from economic transformation through various channels affect the value of assets, collateral, and the ability to repay obligations. If intensified, they can lead to systemic consequences and impact overall financial stability. The NBS is responsible for financial stability and also serves as the financial market supervisory authority. As part of its mandate, it therefore assesses the financial sector’s resilience to climate risks. The tools it uses for this purpose are described in more detail on the Financial Stability subpage.

Sustainable Reserve Management

In managing its non-monetary-policy portfolio, internally also referred to as investment reserves, the NBS invests in various securities including bonds denominated in euros, other foreign currencies, as well as equities in the form of ETFs. In parallel, the NBS follows an internal sustainable investment strategy while investing in so-called thematic bonds (green, social, and sustainable bonds), supporting decarbonization, monitoring the ESG ratings of its portfolios, and also using so-called negative screening when selecting investments.

As a part of a joint Eurosystem initiative, the NBS annually publishes climate reports on the NBS’s non-monetary policy portfolios wherein it discloses, among others, standardized carbon metrics for the securities held. More detailed information on the application of sustainability principles in the management of the NBS’s investment reserves can be found on the Sustainable Reserve Management subpage.

Banking, Capital, and Insurance Markets Supervision

The Sustainable Finance and ESG subpage provides a centralized overview of legislation and other useful information in the field of sustainable finance for supervised entities of the banking, capital, and insurance markets. It explains the content of the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSRD), the European Green Bonds Regulation (EuGBR), and the Regulation on Sustainability Disclosure in the Financial Services Sector (SFDR) and provides additional information on their practical application.