Thakoor: Mauritius banks crucial for climate risk and green finance
Dr Priscilla Muthoora Thakoor, Governor of the Bank of Mauritius, outlined the central bank's strategy for supervising climate risks and mobilizing green finance. Speaking at a workshop in Port Louis, she emphasized banks' critical role in accelerating the transition to a low-carbon economy.
Mauritius confronts climate disruption
The World Bank's Country Climate and Development Report (CCDR) for Mauritius projects significant climate disruptions over the next 25 years, including extreme temperatures and increased cyclone severity.
A 'Compound Shocks Scenario' could impact GDP by up to 10 percent in a single year.
The Bank of Mauritius (BoM) prioritizes identifying, quantifying, and mitigating these financial stability risks, acknowledging the macroeconomic effects of physical risks, including on inflation.
The BoM's Guideline on Climate-related and Environmental Financial Risk Management, effective January 2024, mandates financial institutions to integrate climate risks into operations and disclosures.
While banks show progress in governance and risk management, disclosures remain largely qualitative due to data limitations.
The BoM has also initiated a climate scenario analysis for the banking sector and will soon integrate climate risk into on-site examinations.
Unlocking private capital for green transition
The climate crisis demands substantial investment for Mauritius's NDC 3.0. Public climate finance is insufficient, requiring scaled-up private sector action.
Bank of Mauritius surveys show green exposures remain a low ratio of total loan portfolios.
The CCDR estimates banks could fund over 70% of the annual climate finance gap, approximately USD 213 million per year over five years.
Mobilizing this capital requires targeted de-risking mechanisms, policy clarity, and a supportive financial ecosystem, including taxonomies and disclosure standards.
The Mauritian green taxonomy framework is being finalized, and authorities are working towards adopting ISSB standards, despite persistent climate data gaps.
Beyond rhetoric, towards action
This speech underscores the urgency for Mauritius to act decisively on climate finance.
While regulatory guidelines are now in place, the real challenge lies in mobilizing substantial private capital to meet ambitious national targets.
The Governor's appeal to banks highlights their pivotal role in transforming the economy, moving beyond mere compliance to active participation in sustainable development.