Recognising the financial risks posed by climate change and the transition to a low-carbon economy, central banks and financial authorities are increasingly called upon to ensure climate-sensitive regulatory oversight.
The complex nature of climate change, its global impact, and varying mitigation strategies across jurisdictions make monitoring and analysing climate-related financial risks particularly challenging.
In response, BIS and MAS launched Project Viridis to explore the development of a climate risk platform.
This platform leverages existing data sources to provide early insights into entities potentially exposed to climate-related financial risks.
Its modular design allows for integration of further advancements and international alignment on climate data and metrics, offering richer insights over time.
Key features of the platform include system-wide and institution-level views of financed emissions, consolidation of reported and modeled emissions from key counterparties, and mapping the geographical distribution of assets to assess transition risk exposure from changes in carbon pricing policies and physical hazards.
The report outlines a solution design for future platform functionalities as more data and methodologies become available.
By integrating regulatory and climate data, Project Viridis demonstrates how authorities can gain insights into climate-related financial risks.
Natural language processing techniques are used to extract relevant data from corporate disclosures, helping authorities form initial views on financial institutions’ risk exposures and identify areas for deeper assessment.
Project Viridis was first announced during BIS Innovation Hub’s workplan in January 2022. As its foundational architecture, the Viridis platform uses the Ellipse Data and Knowledge Platform (EDKP), developed by the BIS Innovation Hub Singapore Centre and MAS under Project Ellipse.
The EDKP enables the integration of structured and unstructured data from various sources and is being collaboratively enhanced by more than 15 central banks and financial regulators around the world.
The final report on Project Viridis provides more detailed information on the platform and its potential applications.
Maha El Dimachki
“As the impact of climate change on the global financial landscape intensifies, the need for adaptive and forward-thinking strategies has never been more urgent.
Project Viridis helps equip financial authorities with the insights needed to integrate emerging climate risks into their analysis – and thereby help promote global financial stability,”
said Maha El Dimachki, Head of the BIS Innovation Hub Singapore Centre.
Celine Sia
“Project Viridis is an innovative, collaborative blueprint that leverages technology solutions to systematically track climate-related data and metrices, thereby augmenting regulators’ efforts in assessing physical and transition climate risk exposures of individual banks and the financial system.
This project addresses a common need of global financial authorities, and we look forward to further collaboration to expand such toolkits,”
said Celine Sia, Assistant Managing Director (Economics & Knowledge Management), MAS.
