news
- Central banks in Europe and China are actively addressing climate risks through policies like stress testing requirements, purchasing green bonds, and requiring climate risk disclosure.
- A study by Harvard Business School found that central banks’ actions on climate change are influenced more by national politics than economic exposure to transition risks.
- The study suggests that central banks may not independently correct for a lack of national decarbonization policy but can reinforce such policies based on political demands.
- Countries like the US, South Korea, Costa Rica, South Africa, and Russia were ranked as laggards in both re-risking and de-risking activities related to climate change.
Some central banks, most notably in Europe and China, are working to address climate risks, but in countries like the US that are lagging behind, central banks are unlikely to correct for a lack of national decarbonisation policy, a new study shows.
The analysis of 47 countries from Harvard Business School’s Institute for Business in Global Society found that a central bank’s likelihood to take climate action depended on national politics rather than the country’s economic exposure to transition risks.
“So far, central banks complement, rather than act as a substitute for, regulatory or legislative policy to reduce fossil fuel dependence,” the study says.
It also explains that the findings might dash hopes of those who expect independent central banks to make up for a lack of climate policies in those countries that are not prioritising the issue.
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Green Central Banking publishes a scorecard of green policies and initiatives adopted by G20 central banks, which ranks European countries highly, along with Brazil and China.
Countries the Harvard study ranked as laggards in both re-risking and de-risking include the US, South Korea, Costa Rica, South Africa and Russia. Countries it said are more focused on re-risking than de-risking include Brazil, Switzerland and Sweden.
Read the full post at Green Central Banking.
