(MENAFN) Central banks announced on Tuesday their adoption of artificial intelligence (AI) to gather data for evaluating climate-related financial risks, marking a significant advancement as disclosures by banks and corporations are expected to surge. Institutions such as the Bank for International Settlements (BIS), a central bank forum, the Bank of Spain, the German Central Bank, and the European Central Bank revealed their utilization of the pilot project, Gaia Artificial Intelligence. This initiative focused on analyzing corporate disclosures concerning carbon emissions, green bond issuance, and commitments to achieving zero carbon emissions.
The supervisory authorities overseeing banks, insurance firms, and asset management recognize the critical importance of high-quality data in assessing the impact of climate change on financial institutions. However, they encounter challenges as relevant information is often scattered across texts, tables, and footnotes within annual reports, lacking a standardized reporting framework. In response to this issue, central banks emphasized Gaia's ability to overcome disparities in definitions and disclosure frameworks across jurisdictions. By doing so, Gaia enhances transparency and facilitates the comparison of indicators associated with climate-related financial risks.
In a joint statement, the central banks highlighted the transformative potential of AI in addressing climate-related financial risks. Gaia's deployment represents a significant step forward in harnessing technology to streamline data collection processes and enhance the accuracy and accessibility of information critical for informed decision-making. As climate change continues to shape global economic landscapes, the adoption of innovative approaches like AI underscores central banks' commitment to ensuring the resilience and stability of financial systems amidst evolving environmental challenges.
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