Central banks and regulators of 34 countries issued a stern climate change warning to commercial banks on April 17, 2019. They are members of the Network for Greening the Financial System and include Britain, China, France, Germany, and Japan. Furthermore, they presented their financial institutions with a challenge. Fight climate change or go bust, they warned.
Why the Network Chose to Deliver the Climate Change Warning
The network is a voluntary association sharing best system practices in the context of climate change. It wants to “mobilize mainstream finance to support the transition to a sustainable economy” so the financial institutions survive.
It has now issued its most severe climate change warning yet. This is because it believes increasingly extreme weather “threatens to disrupt trade, production and hurt economic growth.” Moreover, it told CNN this will also increase insurance pay outs and squeeze property prices. However, this is not the end of the perils they face.
What is Green Finance
Somber Warnings from Network for Greening the Financial System
Moreover, commercial banks’ equity will falter as the values of their investments in oil companies and coal power stations fall. They therefore need to take urgent steps to invest in the green economy now, to protect their own interests.
“The enormous human and financial costs of climate change are having a devastating effect on our collective well-being.” So say members of the group, including Bank of England governor Mark Carney in an open letter. Therefore, central bankers and regulators should stress-test financial institutions in the light of global warming, and encourage informed decisions.
“If some companies and industries fail to adjust to this new world, they will fail to exist,” the policymakers said in their open letter. Perhaps it’s time major greenhouse gas polluters woke up and smelt the roses too.
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Preview Image: Pillars of Sustainability
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