Upon completion of this program, participants will be able to:

• Explain the rationale and policy objectives for integrating **ESG** and **Climate Risk** into reserve management.
• Differentiate between climate-related **physical risks** and **transition risks** and their financial impact.
• Apply methodologies to measure the portfolio's exposure to climate risk (e.g., carbon footprint, temperature alignment).
• Evaluate and implement various ESG integration strategies (e.g., negative/positive screening, best-in-class, full integration).
• Understand the legal and governance requirements for ESG disclosures (e.g., TCFD) and policy mandate changes.
• Assess the impact of ESG constraints on the long-term risk and return profile of the SAA.
• Describe the challenges in data quality, standardization, and availability for sovereign ESG assessment.
• Formulate a practical roadmap for evolving the reserve management investment policy to incorporate climate risk.

• Central Bank Reserves Strategists and ESG Analysts
• Investment Committee Members and Senior Management
• Government Investment Fund and Sovereign Wealth Fund Managers
• Risk Management and Financial Stability Analysts focusing on Climate Risk
• Compliance and Internal Audit Professionals for Sustainable Finance
• Academics and Consultants in Sustainable Investment

Portfolio carbon footprint calculation exercises, Group project on drafting an ESG investment policy appendix, Climate stress testing scenario analysis, Policy debates on negative screening vs. full integration, Technical deep dives into TCFD disclosures, Discussions on green bond market development.

Unit 1: Rationale and Risk Framework

• The financial stability rationale for central banks to address climate risk (e.g., impact on bank collateral).
• The long-term investment case for ESG integration (risk mitigation and return enhancement).
• Alignment of ESG policy with the central bank's legal mandate and core objectives (Safety, Liquidity, Return).
• Overview of international initiatives (e.g., NGFS, TCFD) guiding central bank climate action.

• Defining and modeling the financial impact of climate-related **Physical Risks** (e.g., extreme weather, sea-level rise).
• Defining and modeling the financial impact of **Transition Risks** (e.g., policy changes, technology disruption).
• The use of climate stress testing and scenario analysis for the reserve portfolio.
• Challenges in mapping climate risk to traditional credit and market risk metrics.

Unit 2: ESG Integration in SAA

• Implementation of **Negative Screening** (exclusion lists) based on policy and values.
• Implementation of **Positive Screening** or "best-in-class" strategies.
• **Full Integration:** systematically incorporating ESG data into asset valuation and SAA inputs.
• The concept of **Stewardship** (voting and engagement) and its feasibility for reserve managers.

• Challenges in the quality, consistency, and coverage of external ESG data providers.
• Methodologies for calculating the portfolio's **Weighted Average Carbon Intensity (WACI)**.
• Using climate metrics (e.g., temperature alignment) to assess portfolio alignment with Paris goals.
• Policy for managing sovereign and quasi-sovereign ESG data gaps.

Unit 3: Implementation and Governance

• Integrating ESG factors into the credit analysis of sovereign and agency issuers.
• Policy for investing in green bonds, social bonds, and other labeled debt.
• Trade-offs: the impact of ESG constraints on benchmark deviation and tracking error.
• Managing the use of active vs. passive strategies under ESG constraints.

• Establishing clear ESG governance and accountability at the Board and Investment Committee level.
• Compliance with public disclosure requirements (e.g., TCFD recommendations).
• The process of formally updating the **Investment Policy Statement (IPS)** to reflect ESG goals.
• Communication strategy for internal and external stakeholders on ESG progress.

Unit 4: Policy Challenges and Future Outlook

• The role of the central bank as a market participant in fostering sustainable finance.
• The risk of **greenwashing** and the need for clear standards and verification.
• Coordination with monetary policy: the environmental impact of asset purchase programs.
• Future trends in sovereign ESG data standardization and mandatory disclosure.