##oding this biodiversity at a pace that is damaging the natural ecosystems that provide us food, water, and clean air. this in turn could pose significant risks to economic, financial, and social stability. failure to address nature - related risks could adversely affect financial institutions and financial system stability. it is imperative that central banks and supervisors consider these risks in fulfilling their mandates. the financial sector should align itself with the transformations that are necessary to deliver a global economy that is positive for nature. the ngfs has acted quickly in looking into nature - related risks, well ahead of the financial industry. we collaborated with inspire2, an independent research network, to produce reports setting out the importance of biodiversity for the macroeconomic and financial systems. these reports also made preliminary recommendations on how central banks and supervisors might align themselves with the structural transformations required to deliver a nature positive global economy. the ngfs, in the next phase of its work, will aim to equip central banks and supervisors with a common base of knowledge of nature - related risks. we will provide recommendations on how nature - related risks can be integrated into the other work programmes of the ngfs, including supervision, scenario analysis, and monetary policy. we will make nature - related risks more tractable, by focusing on nature - related risks with a nexus to financial risks. we will identify a few local case studies to work through concrete examples where the link from ecosystem degradation to climate change is clear, such as in deforestation. finally, capacity building and training. the ngfs will provide guidance on how central banks and supervisors can build up their capabilities in climate - related and environmental risks. the importance of building capacity and expertise on climate issues within the central banking and regulatory community has been consistently espoused by the ngfs since its beginning. our members are at different stages of progress in their ability to address climate - related and environmental risks. we want to make sure they have the support they need to make meaningful progress in addressing these risks. the ngfs will facilitate the upskilling of central bankers and supervisors, especially from emerging and developing economies, in climate - related and environmental risks. we will develop a training and capacity building strategy for central banks and supervisors, mapping training needs to supply. we will develop a training curriculum, to help central bankers and supervisors build up their capabilities in a progressive manner, from foundational knowledge to more advanced and specific skillsets. as a final remark, let me stress : climate change is a shared crisis

implications of climate change for monetary policy ; providing guidance for central banks on their own net - zero transition ; analysing nature - related financial risks ; and building capacity among its membership. let me start with supervision. the ngfs will take to the next stage its ongoing work to incorporate environmental risks within supervisory frameworks and practices. one of the new areas of focus will be financial institutions ’ transition plans to manage environmental risks. to be credible and impactful, financial institutions ’ transition plans must be based on how they will facilitate the transition of their clients and customers towards greater sustainability. this will in turn depend on the respective industry transition pathways relevant to their clients and customers. the ngfs will examine the role of supervisors in assessing financial institutions ’ transition plans. we will study potential ways to assess transition plans ’ resilience to environmental risks. we will identify good practices among supervisors on overseeing financial institutions ’ transition plans, along with the necessary data needs. we will examine how financial institutions should consider their counterparties ’ transition plans with respect to exposure analysis, transition risk management processes, and their own transition plans. the ngfs will not do this work in isolation. there is some existing work in this space by others, such as the glasgow financial alliance for net zero or gfanz, and the science based targets initiative or sbti. it is important that we have a consistent and comparable approach to assessing financial institutions ’ transition plans. next, climate scenarios. the ngfs will enhance its climate scenarios to sharpen understanding of the impact of physical and transition risks on the financial system. to make sense of the deep uncertainties surrounding climate change, financial institutions need to adopt forward - looking approaches based on scenario analyses as opposed to risk models based on historical data. this is an especially technical area of work where the principle of being science - based cannot be overstated. the ngfs scenarios are widely used. the imf has started using them for some of its financial sector assessment programme, or fsap, work. the scenarios could also potentially be used in future disclosures of climate - related financial risks under the international sustainability standards board, or issb, template for better comparability of risk implications. the ngfs will promote wider application of its climate scenarios through enhancements in several areas. we will strengthen the modelling of physical risks, both acute and chronic. we will enhance sectoral granularity and geographical coverage - especially to emerging economies. we will develop short - term scenarios suitable for stress