Published: 22.11.2021

Today, the Council of Latvijas Banka has approved the Sustainability Strategy, outlining the following key prospective directions regarding sustainability:

  • sustainable monetary policy;
  • sound and sustainable financial system;
  • collection and processing of information;
  • sustainable cash circulation;
  • management of foreign reserves and other financial investment;
  • social responsibility policy and analytical work;
  • sustainable institution.

The section Sustainable monetary policy commits to active participation in the implementation of climate goals outlined in the monetary policy strategy of the euro area, including monetary policy operations. Latvijas Banka advocates a more comprehensive inclusion of sustainability objectives in monetary policy.

The section Sound and sustainable financial system provides for the analysis of sustainability risks – both the physical and transitional ones – within the framework of monitoring and assessment of financial stability risks. This includes further development of the financial sector stress test methodology by incorporating climate change effect scenarios in the stress tests. The considerations related to the reduction of sustainability risks will be taken into account when implementing the macroprudential policy. It is intended to cooperate with the financial sector and the competent authorities to facilitate a sustainable investment environment, inter alia the improvement of visibility needed for sustainable investment and enhancement of the ability to distinguish between green and greenwashed investment.

As to the collection and processing of information, it has been intended to improve the economic and financial data necessary for the analysis of sustainability aspects and decision making as well as to promote their availability and consistency in Latvia and at international level. It has been planned to further develop statistics provided by Latvijas Banka, inter alia to add new information to the Credit Register data on the loans granted.

The section Sustainable cash circulation encompasses the measures planned in cash production, processing and circulation to reduce the ecological footprint by recycling coin metal, limiting the volume of circulation coin production, exchanging circulation coins with other euro area countries as well as to use high efficiency cogeneration units for burning the waste arising from cash processing. The possibilities allowing to utilise waste resulting from cash processing in a more efficient and climate neutral manner will be assessed. As to cashless money, it has been intended to set up and maintain inclusive and energy-efficient payment systems.

The section Sustainable investment contains measures for integrating sustainability objectives into Latvijas Banka's policy for management of foreign reserves and other financial assets. Inter alia, changes to the equity portfolio managed by Latvijas Banka are under way to enhance carbon neutrality by 2050 at the latest and ensure compliance with the provisions set out in the Paris Agreement. The relevant changes will already be implemented in 2022.

As regards the social responsibility policy and analytical work, Latvijas Banka commits to use its analysis to enhance informed decision making in the country, engage in an active dialogue with the financial sector to ensure a common understanding and sustainable transformation of the sector, to enhance financial literacy of the general public, skills and knowledge of teachers, schoolchildren, students and all interested parties concerning the meaning of sustainability.

In the process of shaping Latvijas Banka as a sustainable institution, sustainability objectives will be integrated into various areas of the bank's operational activities, employees' knowledge of sustainable development will be improved and their "green" habits will be fostered. In its activities, Latvijas Banka complies with environmental protection standards and facilitates, to the extent possible, circular economy practices. Complete digitalisation of document circulation, waste sorting, solar panels and automated management of electrical equipment have reduced the ecological footprint of Latvijas Banka.

Latvijas Banka pursues long-term public good in its activities and is willing to maximise its contribution to sustainability. Central banks play a special role, i.e. using their independence and competence, they shape a long-term decision-making culture both in the public sector and in society as a whole regardless of economic and political cycles.

In its activities and analysis, Latvijas Banka complies with the dynamically evolving international framework, including the Eurosystem's policy and the European Union's Green Deal objectives, climate change objectives (currently – the Paris Agreement) and the 17 Sustainable Development Goals defined by the UN. Latvijas Banka takes part in the work of the Network for Greening the Financial System, which is the most significant international platform focusing on cooperation between central banks and financial market supervisors to ensure sustainable transformation of financial systems.