African central bankers say climate change is a financial stability imperative, while the continent’s leaders endorse a continental water security framework addressing the US$30bn annual funding gap, and European Central Bank (ECB) staff raise concerns over ESRS simplification.
Climate resilience is financial stability imperative, say central bankers
“The truth is simple: climate risk is financial risk,” Olayemi Cardoso, governor of the Central Bank of Nigeria, told senior policymakers earlier this month. He made the remarks at a forum organised by the Central Bank of Egypt and International Finance Corporation (IFC) forum in Cairo, as African central bankers positioned climate resilience as fundamental to financial stability.
The Egyptian central bank’s governor, Hassan Abdalla, said that “climate change is no longer an environmental issue, but has evolved into a financial one”, highlighting his bank’s progress in building a comprehensive green regulatory framework over the past five years. This includes sustainable finance guiding principles issued, binding sustainable finance regulations, and the carbon border adjustment mechanism directive.
Officials pointed to Egypt’s 30 by 30 programme, conducted in partnership with the IFC, as a key example of effective implementation. The programme has mobilised US$700m in investments including $470m in climate finance, with participating banks reducing emissions by over 68,000 tonnes of CO2. Cardoso stated the programme could provide a continental model, stating that “resilience is never accidental” but “the product of difficult, disciplined policy choices”.
Ethiopis Tafara, IFC regional vice president for Africa, noted that “transformative finance is never built in isolation”, but requires “partners willing to take a long-term view, with returns that are not only financial, but national”.
ECB staff flag concerns over simplified sustainability reporting standards
ECB staff have published an opinion warning that simplified European Sustainability Reporting Standards (ESRS) risk limiting data availability and hampering comparability across companies.
The staff opinion acknowledged that corporate reporting body Efrag, which developed the standards, achieved “very significant simplification” but identified three critical concerns: the introduction of “numerous permanent relief measures, phase-ins and exemptions from disclosure requirements, together with the removal of some critical datapoints”; deviations from International Sustainability Standards Board standards; and insufficient clarity for financial sector disclosures.
The opinion recommended adding time limits to reporting reliefs, removing additional three-year phase-in reliefs for anticipated financial effects, and ensuring financial institutions are not exempted from greenhouse gas emission reduction target requirements under ESRS E1.
It also stated that “transparent, comparable, and reliable sustainability information is critical for providing insights into financial risks, effectively guiding capital flows and supporting a smooth transition to a sustainable economy”.
African Union launches water strategy addressing $30bn annual financing gap
African leaders officially endorsed the Africa Water Vision 2063 and Policy at the 39th African Union (AU) Summit.
The continental strategy was developed with support from the African Development Bank (AfDB) and positions water sovereignty as fundamental to economic transformation and financial stability. It also stresses the importance of transboundary cooperation and outlines a framework for addressing financing gaps.
Zambian president Hakainde Hichilema, who led the launch, warned of an annual water investment gap estimated at $30bn and described water as “Africa’s most vital strategic resource” that “powers our industries” and “binds our nations together”.
The strategy explicitly links water scarcity to macro-critical risks, warning that the “cost of inaction will be catastrophic”, including drought-induced GDP losses, forced migration and ecosystem collapse. The framework calls for deploying “partial credit guarantees” from the AfDB to de-risk infrastructure projects, piloting green bonds and hydro-resilience bonds, and establishing national water funds in 80% of member states by 2053.
AU commissioner Moses Vilakati stated that “investing in water and sanitation is not a cost”, but rather “one of the highest return on investments Africa can make”.
Australia launches sustainable investment labelling consultation
The Australian Treasury has opened a second public consultation on a proposed sustainable financial product labelling regime, seeking feedback on scope, consumer-facing disclosures, thresholds and evidentiary requirements.
The consultation paper, released earlier this month, proposes applying labelling requirements to financial products marketed as “sustainable or similar” using terms such as green, climate, ESG, decarbonisation or socially aware.
The Treasury is weighing options including a prescriptive 70% threshold for sustainable assets, disclosure-only requirements, and principles-based evidentiary assessment.
The consultation document notes that whilst around half of Australians would consider investing sustainably, only one in five actually does, with 80% of investors citing lack of independent information as a barrier to switching to greener options.
The government has set 2027 as the target commencement date for the regime, subject to final policy decisions. Submissions close on 13 March 2026.
Deutsche Bank issues inaugural European Green Bond
Deutsche Bank has raised €500m through its first European green bond issued under the EU’s updated green bond standards. The four-year bond, callable after three years with a 2.875% coupon, will exclusively refinance assets within the bank’s green buildings category, consisting of residential real estate loans compliant with the EU’s taxonomy.
“The issuance of our first European Green Bond is a clear demonstration of our commitment to the highest standards of sustainable finance,” said Richard Stewart, Deutsche Bank Group treasurer.
Research
Climate risks: the role of financial regulators and supervisors
International Monetary Fund
This IMF-published guidance finds that ignoring material climate-related risks means supervisors risk failing to meet their core mandates of ensuring financial stability and resilience. The paper urges regulators to leverage existing tools aligned with international standards, while emerging market authorities should act on evidence-based materiality assessments rather than political agendas.
Climate-related disasters can push up the cost of debt
European Central Bank
ECB research demonstrates that climate-induced disasters increase sovereign bond yields, with storms pushing borrowing costs up approximately 66 basis points for advanced economies and over 140 basis points for emerging ones. High-debt countries experience larger and more persistent yield increases than low-debt nations, with transition risks – measured by carbon emissions intensity – increasingly priced into sovereign debt, particularly for developing economies post-Paris Agreement.
This page was last updated February 25, 2026