April  18, 2019

Anna Wood 

The heads of two major central banks, Governor of the Bank of England Mark Joseph Carney and Governor of the Bank of France François Villeroy de Galha, wrote out warning about the financial risks of climate change in an open letter on April 17. The letter was co-signed by the chairperson of the climate-focused Network for Greening the Financial System (NGFS), a coalition of 34 central banks and supervisors from countries including China, France, Germany, Japan and the United Kingdom, which was formed at the Paris “One Planet Summit” in December 2017.
 
In the letter, Mr. Carney and Mr. Villeroy de Galhau described “the catastrophic effects of climate change” already having an impact on earth, such as “blistering heatwaves in North America to typhoons in south-east Asia and droughts in Africa and Australia” that affect crops and

“these events damage infrastructure and private property, negatively affect health, decrease productivity and destroy wealth”.
In the process of responding to environmental and climate challenges, NGFS committed to financing the transition to a green and low carbon economy consistent with the “well below 2 degrees Celsius” goal set out in the 2015 Paris agreement and promoting sustainable growth. “Carbon emissions have to decline by 45% from 2010 levels over the next decade in order to reach net zero by 2050. This requires a massive reallocation of capital,” said in their open letter.
 
They warned that increasingly extreme weather threatens to disrupt trade as well as production and hurt economic growth while increasing insurance payouts and squeezing property prices. They recommended central banks and other regulators combine climate change risks into their supervisory activities, such as by stress testing banks on their vulnerability to climate change, and also help financial institutions make informed investment decisions on assets which are sustainable.

Photo :Webshot.