Alain Naef advocates for the Swiss National Bank to embed climate-related risks into its risk assessments and increase transparency, aligning with international practices to safeguard price and financial stability in a changing environment.
Alain Naef argues in the Neue Zürcher Zeitung that central banks cannot afford to ignore climate change because the risks it creates are inseparable from their mandates to preserve price and financial stability. Naef, an assistant professor at ESSEC Business School and former economist at the Banque de France, contends that physical risks from extreme weather and supply‑chain disruption, together with transition risks from regulation and shifting demand, have material effects on inflation, asset values and the functioning of financial markets , and therefore fall squarely within the remit of institutions such as the Swiss National Bank.
According to Naef, the view that the Swiss National Bank should confine itself narrowly to traditional monetary policy and “ignore” climate matters misunderstands the central bank’s core responsibilities. He notes that the Network for Greening the Financial System, of which the SNB is a member, now counts 149 institutions from over ninety countries, a signal that addressing climate‑related financial risk has become a mainstream central banking concern. The NGFS’s recent report on “The green transition and the macroeconomy” underlines this point, analysing how mitigation policies, technological innovation and shifts in preferences can alter macroeconomic variables and therefore influence monetary policy decisions.
Naef also rejects the idea that any engagement with climate risks would amount to taking the SNB “in den Dienst der Klimapolitik” or practising “Strukturpolitik”. Rather, he frames such actions as prudent fulfilment of the SNB’s legal mandate to safeguard price and financial stability in a changed risk environment. He points to the 2024 Swiss Climate and Innovation Act, accepted by voters, which sets a national net‑zero by 2050 objective and alters the legal and economic context in which the central bank operates.
That said, Naef is sharply critical of the SNB’s current communication and transparency. He argues that the bank has so far failed to disclose sufficiently the models and assumptions it uses to assess climate risks and to explain portfolio decisions such as exclusions or divestments. Silent or opaque adjustments, he warns, dilute the intended market signal and reduce accountability.
Independent research supports some of these concerns. A 2021 study by the Basel Committee on Banking Supervision, and more recent work by international institutions, has found that conventional modelling techniques often understate climate‑related exposures. The International Monetary Fund has likewise argued that central banks are uniquely placed to mainstream climate risks into financial stability assessments and to promote robust risk‑management practices. Christine Lagarde, speaking for the European Central Bank, has repeatedly emphasised that while governments carry primary responsibility for the transition, central banks must analyse, advise and act within their mandates to mitigate the impact of climate‑related shocks on price stability and the transmission of monetary policy.
There is, nevertheless, a clear boundary to the argument Naef advances. Multiple central bankers and policy papers stress that central banks should act within legal mandates and not substitute for fiscal or regulatory policy. Naef acknowledges this distinction, insisting that recognising climate risks is a technical and forward‑looking requirement of prudent central banking rather than a substitution for democratic political decisions on climate policy.
Ultimately, Naef calls for a twofold response from the SNB: first, systematic integration of physical and transition risk into risk assessments and scenario analysis; second, far greater transparency about methods, modelling and portfolio choices so that markets and the public can evaluate how the bank is protecting price and financial stability in the face of climate change. He contends that such steps would align the SNB with international practice as documented by the NGFS, the IMF and central banks such as the ECB, while preserving the institution’s operational independence and core mandate.
- https://www.nzz.ch/meinung/zentralbanken-duerfen-den-klimawandel-nicht-ignorieren-ld.1920805 – Please view link – unable to able to access data
- https://www.nzz.ch/meinung/zentralbanken-duerfen-den-klimawandel-nicht-ignorieren-ld.1920805 – In this opinion piece, Alain Naef argues that central banks, including the Swiss National Bank (SNB), must address climate change risks to maintain financial and price stability. He criticises the SNB’s focus on its core mandate, suggesting that ignoring climate risks undermines its responsibility. Naef highlights the Network for Greening the Financial System (NGFS), comprising 149 members from over 90 countries, as evidence of a global consensus on this issue. He emphasises the need for proactive measures to mitigate both physical and transition risks associated with climate change.
- https://www.ngfs.net/en/press-release/ngfs-publishes-report-green-transition-and-macroeconomy-monetary-policy-perspective – The Network for Greening the Financial System (NGFS) released a report titled ‘The green transition and the macroeconomy: a monetary policy perspective’. The report examines how macroeconomic variables, such as inflation and output, could be affected by the transition to a net-zero economy. It analyses key drivers of the transition, including climate change mitigation policies, innovation in green technologies, and changes in preferences, and considers the impacts of increased green investments and associated uncertainties.
- https://www.ecb.europa.eu/press/key/date/2024/html/ecb.sp240607_1~faecc95713.en.html – European Central Bank (ECB) President Christine Lagarde addressed the role of central banks in the face of climate and environmental risks. She highlighted that climate-related risks can lead to financial losses or higher funding costs for financial institutions, affecting the transmission of central bank policies. Lagarde emphasised the need for central banks to contribute to mitigating these risks within their mandates, noting that while governments are primarily responsible, central banks can play a supportive role in preparing the economy for future challenges.
- https://www.ecb.europa.eu/press/key/date/2021/html/ecb.sp210711~ffe35034d0.en.html – In a speech, ECB President Christine Lagarde discussed the impact of climate change on the ECB’s primary mandate of price stability and other areas of competence, including financial stability and banking supervision. She acknowledged that while governments are primarily responsible for facilitating an orderly transition, central banks can contribute by analysing, advising, and acting within their mandates. Lagarde outlined the ECB’s approach to integrating climate considerations into its monetary policy framework and operations.
- https://www.imf.org/-/media/Files/Publications/DP/2024/English/PFSGFEA.ashx – The International Monetary Fund (IMF) published a departmental paper titled ‘Preparing Financial Sectors for a Green Future’. The paper discusses the role of central banks in supporting the development of climate finance and markets. It highlights that central banks, as guardians of monetary policy and financial stability, are uniquely positioned to support the transition to an environmentally sustainable and green economy. The paper outlines key areas where central banks can contribute, including mainstreaming climate risks into financial stability assessments and supporting the development of robust risk management practices.
- https://www.youtube.com/watch?v=fsJTeGdGIsU – In this episode of The ECB Podcast, experts discuss the impact of climate change on financial stability, the role of central banks in addressing climate-related risks, and the importance of international cooperation. They explore how stress tests can help identify these risks, the challenges in promoting green investments, and the role of banks in the transition to a more sustainable economy. The discussion also covers the importance of transparency and the need for central banks to act within their mandates to mitigate climate-related financial risks.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
7
Notes:
The article presents a recent perspective on central banks’ role in addressing climate change. However, similar discussions have been ongoing for several years, with notable publications in 2021 and 2023. ([bundesbank.de](https://www.bundesbank.de/en/press/speeches/climate-change-and-central-banks-supporting-the-green-transition-by-pursuing-price-stability-908912?utm_source=openai)) This suggests that while the topic is timely, the specific arguments may not be entirely novel.
Quotes check
Score:
6
Notes:
The article includes direct quotes attributed to Alain Naef. However, without access to the original NZZ article, it’s challenging to verify the exact wording and context of these quotes. ([english.nzz.ch](https://www.english.nzz.ch/?utm_source=openai)) This lack of verification raises concerns about the authenticity and accuracy of the quoted material.
Source reliability
Score:
8
Notes:
The article is published by the Neue Zürcher Zeitung (NZZ), a reputable Swiss newspaper known for its quality journalism. However, the specific article is behind a paywall, limiting direct access to its content. ([english.nzz.ch](https://www.english.nzz.ch/?utm_source=openai)) This paywall restricts independent verification and raises concerns about the accessibility of the information.
Plausability check
Score:
7
Notes:
The arguments presented align with ongoing global discussions about central banks’ roles in addressing climate change. ([brookings.edu](https://www.brookings.edu/articles/why-the-fed-and-ecb-parted-ways-on-climate-change-the-politics-of-divergence-in-the-global-central-banking-community/?utm_source=openai)) However, without access to the full article, it’s difficult to assess the depth and originality of the analysis. The reliance on a single, potentially paywalled source further limits the ability to verify the claims made.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article presents arguments about central banks’ roles in addressing climate change, referencing a recent NZZ article by Alain Naef. However, the reliance on a single, paywalled source hampers independent verification and raises concerns about the originality and depth of the analysis. The lack of accessible supporting material and the inability to verify quotes further diminish the credibility of the content.