to avoid sudden shocks. annual data requests, as part of our supervision, could give greater insight into the size and nature of the risk. this can form the basis for supervisors to engage in dialogue with institutions. we may then expect them to prepare a strategy for integrating esg risks in their short and longer term risk analyses. to explain how they can adapt their investment strategy to align with the paris ambition. and to demonstrate they have a clear view on the viability of their business model in a two degree scenario. in contrast to a supervisory dialogues, the one thing i believe we must not do, is to create wrong incentives. there are also advocates for changing capital requirements. to discourage brown exposures, or encourage green investments. however, we at dnb believe that capital requirements must essentially safeguard financial solidity and stability. hence, without conclusive evidence that green exposures are less risky than other exposures, lowering capital requirements by introducing a green supporting factor will only increase the risks to financial stability. with evidence, the situation would change dramatically … we are not there yet. we need to work harder to determine the risk in “ green ”, but also in “ brown ” exposures. and to identify whether there exists any risk exposure differential between green and brown assets. this also is one of our focal areas in the ngfs. we can draw on the experience of all our members. and arrive at a common view. also to safeguard a level playing field across prudential jurisdictions. timelines ngfs standing here now, i must say i ’ m very proud of the network ’ s progress. ten months ago, the acronym ngfs still sounded odd. but today, we are right back on track and more and more countries are queuing up to board the train. it may run on only partly renewable sources at the moment, but hopefully in the near future it will be fully powered by certified green energy! and you will be able to assess the extent to which we succeed. the analysis conducted in the work streams will feed into a ngfs report to be issued in the first half of 2019. the final purpose is to define and develop best practices and promote these such so they will be implemented within and outside of the membership of the ngfs. conclusion ngfs and dnb need to demonstrate they can support, underpin and promote the transition to a green financial system, as part of their regular mandate. and while our research on a possible future supervisory framework will continue, we ’

now you might be thinking, what do we actually do? what impact are we trying to achieve? activities ngfs members voluntarily exchange valuable experiences and best practices on climate risk analysis and mitigation tools. these activities are structured around three workflows : microprudential supervision ; macrofinancial issues ; and scaling up green finance. in terms of microprudential supervision, we study and identify best practices of central banks and supervisors in analyzing climate - related risks affecting individual institutions. we map current supervisory practices for integrating environmental risks into micro - prudential supervision. this forces individual institutions to consider the impacts on their balance sheet. we also review current practices on environmental and climate information disclosure by financial institutions so we can identify best practices. secondly, we attempt to quantify the physical and transition risk at a macroeconomic level. here, we will identify examples of good practices by ngfs members. these include for example macro stress tests or scenario analyses. our last area of focus is the role of central banks in scaling up green finance. we discuss current practices for incorporating esg criteria in all areas of central bank operational activities. against this backdrop, the ngfs will organize the seminar ‘ sustainable & responsible investment for central banks ’. the event will be hosted here at dnb, on the 21st of september. then, we will discuss best practices and principles for integrating sustainability considerations into management of official reserves. concrete examples this might still sound a bit abstract in terms of what it could mean for you, for the financial sector. so let me return to the first area of activity : how can supervisors integrate climate risk into supervision? last year, dnb examined the exposures of financial institutions to carbon intensive sectors. we published our findings in a report titled ‘ waterproof ’. this gave us a good indication of the vulnerabilities in a hard transition scenario. we also looked at how new types of national policy could cause financial risks to materialize already in the shorter term. a good example of this is in the dutch commercial real estate sector. in the netherlands, as of 2023, all office buildings will have to meet minimum energy efficiency requirements, or face closure. in 2017, it was estimated that half the offices in the netherlands did not meet this requirement. this raises the prospect of write - offs for lenders. as i said, i strongly believe in predictable, transparent public institutions. this example shows how new policies to achieve our dutch carbon emission goals require transparent implementation,