Irma Rosenberg: Rising commodity prices Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at SEB, Stockholm, 9 May 2008. *  *  *  A challenge for the central banks What have we been able to read in the news in recent months? Let me give some examples. Mining companies have begun prospecting for ore in many parts of Sweden, particularly in the Norrland region. Municipalities which have long experienced problems with emigration, such as Pajala, are now facing a more positive situation. Optimism has increased. Increased trade barriers are being reported in some parts of the world. But this is not a question of what has been the usual case, where countries protect domestic industries by limiting certain exports. Instead they have introduced high charges to prevent exports of foods such as grain and rice. We have also been able to read about demonstrations and food riots in poor countries such as Haiti, Cameroon and Burkina Faso. The UN food organisation FAO has also warned of social and political unrest in several countries. Why am I taking up these examples? What have they got in common? Well, they are the result of one and the same phenomenon – that world market commodity prices have almost exploded in recent years. The high metal prices have made it profitable to search for ore and extract metals that earlier would have been left in the ground.

The EBA is also working on guidelines on the transition plans to be drawn up by credit institutions. 17  lhttps://www.bde.es/f/webbde/INF/MenuVertical/Supervision/Normativa_y_criterios/Recomendaciones_BdE/Banco_ de_Espana_supervisory_expectations_relating_to_the_risks_posed_by_climate_change_and_environmental_degradati on.pdf 18  https://www.bankingsupervision.europa.eu/press/pr/date/2020/html/ssm.pr201127~5642b6e68d.en.html  19  https://eur-lex.europa.eu/eli/reg_impl/2022/2453/oj  20  https://www.eba.europa.eu/eba-publishes-its-roadmap-sustainable-finance  In recent years, supervisory efforts in this field have also stepped up. For example, with the ECB thematic review,21 carried out in 2022, on compliance with supervisory expectations and the climate risk stress test22 whose results were published in the summer. These exercises showed that although banks have made progress in including these risks in their day-to-day management, there is still much to be done. I will now briefly mention the key aspects of these two exercises. Thematic review  The thematic review23 shows, among other aspects, that more than 80% of institutions recognise that climate risks have a material impact on their risk profile and that, in consequence, they have begun to include climate-related risks in their risk management framework. For example, they have mapped risk exposures and allocated responsibilities within their organisation, set risk indicators (KPIs) and begun to develop qualitative mitigation strategies. However, these measures are still not considered sufficiently sophisticated and, in addition, there is still a considerable shortage of granular data. Indeed, less than 10% of institutions use sufficient forward-looking data to manage this risk. Both the ECB and the national supervisors hope that by the end of 2024 institutions’ practices in this area will be fully aligned with supervisory expectations.