On April 26, 2022, the Network of Central Banks and Supervisors for Greening the Financial System (“NGFS”) issued a request for information on its directory of climate data.1 Specifically, NGFS requested feedback through an online questionnaire on (i) the contents of the directory, including potential data gaps, and (ii) the format and functionalities of the directory’s prototype web interface.2 In this Legal Update, we provide background on NGFS and the climate data repository and discuss NGFS’s request for information.
NGFS is a global, voluntary organization made up of 114 central bank and financial supervisor members.3 NGFS was formed in December 2017 at the Paris “One Planet Summit” to define, promote and contribute to the development of practices within and outside of NGFS and to conduct or commission analytical work on green finance.4 Members exchange best practices, ideas and research related to environmental and climate risk management in the financial sector. Many of the major US financial regulators are members, including the New York Department of Financial Services, the Office of the Comptroller of the Currency, the Federal Insurance Office, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency and the Federal Reserve Board.5
One of NGFS’s most significant projects to date has been the creation of climate scenarios for central banks and supervisors to use in analyzing the physical and transition risks presented by climate change.6 NGFS also has issued a report recognizing that there are persistent gaps in data on how climate-related risk may impact financial institutions, which limit use of the scenarios.7
To identify and help fill the data gaps, NGFS created a climate data directory. The climate data directory does not directly contain climate change data, rather it describes data sources that are available from other sources; it is more like a phone book than an encyclopedia. It is currently operated by NGFS through its website.
Request for Information
NGFS issued the request for information to help it enhance the climate data directory. In its press release announcing the request for information, NGFS stated that it is seeking to build on the directory to propose practical solutions and policy recommendations to bridge climate data gaps and maximize the availability of climate data for the financial sector. NGFS is seeking comments specifically on both the content of the directory with respect to climate data sources and the format and functionalities of the current directory’s web interface. Through the Banque de France, NGFS has provided a short online questionnaire through which the public can submit feedback by close of business on May 6, 2022.
Importantly, NGFS requested feedback on the substantive content of the directory and specifically requested comments on any potential data gaps and sources that have not been identified so far. NGFS’s questionnaire asks several key questions and provides an opportunity for users and potential users to give feedback on how NFGS can best enhance the directory to meet users’ needs. The questionnaire asks commenters to flag any metrics, methodologies or data items that are not currently contained in the directory and to flag any data items that commenters consider to be actual gaps. This feedback may help NGFS identify which additional metrics, methodologies and data items users are missing and, to the extent such items already exist, add them to the directory. In addition, NGFS can use the feedback to identify priority data gaps and focus work on resolving those data gaps.
The questionnaire also requests input on whether the current structure of the directory efficiently answers data needs, how the directory should be updated and with what frequency, and whether the directory should be designed for stakeholders to upload references and links to data sources they use. Comments in response to these questions may help NGFS make enhancements to the usefulness and contemporaneity of the directory. The questionnaire also indicates that NGFS may be interested in shifting the operation of the directory to another entity. Specifically, the questionnaire asks whether the directory should be located and maintained within a public institution, private institution or public partnership.
NGFS also requested feedback on the format, structure and functionalities of the directory. These questions include whether the current set-up is sufficiently intuitive and user-friendly and whether users have encountered any issues while using the directory. NGFS also asked whether the user journeys the directory currently offers are fit for the directory’s purpose.
Stakeholders in the United States and elsewhere have raised concerns regarding the availability of sound climate data on which to base climate-related risk management decisions.8 Some private groups are working to leverage and enhance existing climate data, but to date that effort lacks standardization and a regulatory imprimatur.9 By providing feedback on NGFS’s questions, stakeholders will have the opportunity to identify significant data gaps they may be struggling to fill and can help NGFS enhance a climate resource that will be available to all.
A stronger directory may help financial institutions obtain data needed to assess their potential, future physical and transition risks from climate change. These assessments are becoming increasingly important to US financial institutions and others as US and other global regulators consider supervisory guidance and begin to express expectations on how financial institutions must manage climate-related risk. A government or international effort to develop climate data resources, such as NGFS’s directory, could help to alleviate a portion of the burden on financial institutions.
1 NGFS, The NGFS launches a consultation on its repository of climate data needs and available sources (Apr. 26, 2022), https://www.ngfs.net/sites/default/files/medias/documents/pr_repository_consultation_final.pdf. While the request was issued by NGFS, the questionnaire for providing feedback is operated by the Banque de France, the NGFS Secretariat.
2 The questionnaire is available at https://www.banque-france.fr/en/webform/survey-consultation-ngfs-directory.
5 Discussed in our December 15, 2020 Legal Update “US Federal Reserve Joins the Network of Central Banks and Supervisors for the Greening of the Financial System.”
6 Discussed in our June 14, 2021 Legal Update “Network for Greening the Financial System Issues Second Iteration of Climate Scenarios.”
7 NGFS, Progress report on bridging data gaps (May 2021), https://www.ngfs.net/sites/default/files/medias/documents/progress_report_on_bridging_data_gaps.pdf/.
9 Please listen to our recent webinar that included a discussion of climate risk data issues: https://www.mayerbrown.com/en/perspectives-events/events/2022/04/climate-risk-management-the-only-constant-is-change.