Central banks and financial supervisors can support this effort to varying degrees, depending on their mandates. The NGFS has launched a Blended Finance Initiative to contribute to this collective effort in two ways. We will use our convening power to raise awareness of blended finance for climate action and help to bring the relevant parties into the room. We will identify any potential market, policy or regulatory barriers that hamper the scaling up of blended finance. The NGFS aims to launch at COP28 a Handbook on Blended Finance. We will release next month a conceptual note on the Handbook which will serve as a preamble. The Handbook will be organised around three key themes. First, identify key elements needed to build a climate blended finance ecosystem. To scale up blended finance for climate adaptation and mitigation, we need financial instruments and vehicles that can align incentives in both the public and private sector and entice private capital with varying appetite for risk. 4/5  BIS - Central bankers' speeches  For example, green bond funds or outcome-based debt instruments such as sustainability-linked bonds can attract various types of private sector actors if key contractual terms are appropriately set. To attract investors with different expected returns, risk profiles, investment horizons and objectives, the investor base should be expanded. For example, we can aim for a higher level of participation by institutional and private equity investors as well as philanthropic capital. Second, highlight best practices and principles to scale up blended finance for climate adaptation and mitigation.

Green and transition financing is nowhere near what is required to get to net-zero by 2050. The financial sector can play a key role in catalysing transition towards a low carbon, climate-resilient economy. But we are more than 35% short of the annual investment of $ trillion that would be required to get to net-zero by 2050. The NGFS aims to promote the financial sector as a catalyst for the transition to a net-zero world. Through our diverse membership of 125 central banks and financial regulators from more than 90 advanced, emerging, and developing economies, we are well-positioned to do this. Our work programme is multi-faceted. We are: enhancing supervisory practices on managing climate risks; designing actionable climate scenarios; assessing the implications of climate change for monetary policy; providing guidance for central banks' own net-zero transition; analysing nature-related financial risks; and building skills and capabilities among the NGFS membership Today, I want to talk about two relatively new areas where the NGFS is making a determined push:  transition planning  1/5  BIS - Central bankers' speeches  blended finance  Supporting transition planning To achieve net zero, every economic sector will need to decarbonise. Different sectors will have different transition pathways. In hard-to-abate sectors, the transition could be quite disorderly. Those firms or industries that fail to adequately decarbonise may risk being left with non-viable businesses or stranded assets. To support every sector to decarbonise, financial institutions need to fund activities supporting transition and not just green projects.