7 June 2021
Based on the Parliament’s decision, the promotion of environmental sustainability has been included in the MNB’s statutory objectives. As the first European central bank to obtain a green mandate, the MNB will continue its efforts so far to shift Hungary’s financial system and as a result the entire economy to a climate-friendly path.
The modification to the Act on the Magyar Nemzeti Bank has been announced in the Hungarian Official Journal, which names the support of the Government’s policy linked to environmental sustainability as one of the Bank’s mandates. Effective from 2 August 2021, the modification offers a legal basis for aspects of environmental protection and sustainability to have a more significant role in the Bank’s activities without prejudice to its primary objective i.e. reaching and maintaining price stability.
Although the world’s central banks pay more attention to environmental sustainability, there are hardly any states except for Hungary, which have given such a straightforward mandate to its central bank to represent climate protection, ‘green thinking’ in the financial world to ensure sustainable economic development.
In line with its Green Programme, announced in February 2019, the MNB has applied an increasing number of instruments to reduce risks related to climate change and other environmental issues and to enhance the financing of the domestic green economy. To provide professional assistance, the MNB published a recommendation and measured the performance of the financial sector in its Green Financial Report, and expects its products, services and internal operations to become more climate-friendly.
To make green mortgages for households with favourable conditions more popular, the Bank first launched a Green Capital Requirement Deduction Programme, and subsequently started a similar initiative to stimulate green corporate and local government lending. This group may be extended in additional areas in 2021 e.g. sustainable agriculture, green transport or energy efficiency. In addition, the MNB is working on the National Sustainable Capital Market Strategy. This work is also supported by the European Commission and the EBRD, and the Bank cooperates with its partners from ministries and the Budapest Stock Exchange.
According to additional modifications to the Act on the Magyar Nemzeti Bank, from 2022, up to six per cent of the Bank’s revenues resulting from penalties will be used to neutralise its carbon footprint arising from its operation. However, the costs to achieve this objective may decline gradually in the future, because the MNB undertook to reduce its carbon dioxide emission by 30 per cent within three years relative to the value in 2019, and by 80 per cent until 2025.
In terms of sustainable ecological footprint, the MNB offset the entire environmental pressure resulting from its international conferences jointly with non-governmental organisations by restoring a marsh-land with alders in Pápateszér. The Bank will complete habitat restoration projects that are capable of neutralising its entire carbon footprint in the coming years. To that end, the MNB is preparing the funding of an afforestation project of an oak forest in 27 hectares near Geszt in the Körös-Maros National Park.
Magyar Nemzeti Bank