New milestones in the greening of the domestic financial system

22 November 2021 -Hungary is becoming more visible on the global green financial map: a global sustainable sustainability analysis published recently, includes Hungary and the MNB in the forefront in many respects. Meanwhile, thanks to the OTP Bank there is the first Hungarian financial participant in one of the most significant international banking initiatives aiming for sustainability.

In October, theinteractive online tool(Sustainable Financial Regulation and Central Bank Activities Tracker, SUSREG Tracker) developed by the World Wide Fund for Nature (WWF), was released. This tool makes financial regulators, supervisory authorities and central banks comparable in terms of how climate, environmental and social aspects on a larger scale are incorporated in their practice. This tool assessed the financial regulatory environment of 37 countries including Hungary and the European Union in three sustainability categories: climate, environment and society.

Although the detailed ranking to the assessment was not published, it is an important international feedback that based on the assessment of supervisory performance considering climate aspects, the Magyar Nemzeti Bank's (MNB) sustainability activity and measures handling financial risks related to climate change were the most advanced from the institutions of 37 countries under review. The assessment highlights as a positive aspect in the subject of monetary policy, that climate and environmental considerations are clearly presented in the MNB's practice.

Overall, the WWF' evaluation paints a very positive picture of the activity of Hungary's central bank related to sustainability.

The MNB considers it an important climate friendly step and welcomes the fact that the OTP Bank Nyrt joined the UN Environment Programme's initiative namedPrinciples for Responsible Banking(Principles), as the first Hungarian credit institution. So far, the document has been signed by 250 credit institutions worldwide, including foreign parent banks of several commercial banks operating in Hungary.

Having signed the requirements in writing, credit institutions must review their business operations within 18 months to identify the elements thereof, having the biggest impact on the environment and offer possible support of methodological nature to UN experts. Subsequently, a minimum of two specific objectives, consistent with sustainability efforts e.g. climate protection, must be set and communicated publicly. The progress on the implementation of these objectives and the achievements must also be communicated publicly. Such an objective to be formulated may be sustainable agriculture or in turn, completing some specific, realistic but ambitious tasks in the area of funding green energy production.

It is known thatin February 2020 , the MNB endorsed this initiative offering support and as a regulatory institution undertook to encourage a growing number of Hungarian banks to sign the principles laid out in this UN document aiming to support the environment, social sustainability and responsible corporate governance.

Magyar Nemzeti Bank