The summary of the Sixth Assessment Report of the United Nations (UN) Intergovernmental Panel on Climate Change (IPCC) contains a message often heard before. The report states that humanity’s impact on the Earth’s environment has caused 1.1°C heating above pre-industrial levels. Every additional tenth of a degree of warming matters, and can strongly affect local climate and agricultural output, as well as the living standards and welfare of millions of people worldwide.

One of the main objectives of the Paris Agreement is to limit human disruption of the climate in order to keep global heating as close to 1.5 degrees Celsius as possible. Governmental authorities, businesses, and non-governmental organisations around the world have adopted defined targets for the reduction of greenhouse gas emissions, in accord[1]ance with the Paris Agreement. Pursuant to the Climate Act, no. 70/2012, the Government of Iceland, Government-run institutions, and companies that are majority-owned by the Government must adopt a climate strategy with explicit targets for reduced greenhouse gas emissions and carbon neutrality. This includes the Central Bank of Iceland, whose environmental and climate policy obliges it to reduce greenhouse gas emissions by 40% between 2019 and 2030.

The Central Bank’s Sustainability Report is now issued for the second time. The report describes the actions taken by the Bank in connection with sustainability and climate issues in 2022, provides sustainability information relating to the Bank’s operations, and explains how the Bank incorporates sustainability into its core activities. The report aims to shed light on the Bank’s activities and give account of its performance in pursuing its climate and sustainability objectives.

A great deal remains to be done in the areas of climate and sustainability, as the IPCC’s Sixth Assessment Report indicates. Although other Governmental authorities bear the primary responsibility for implementing strategies and ensuring funding for climate risk mitigation and systematic transition to a carbon-neutral economy and a sustainable society, it is vital that the Central Bank contributes within its purview