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Polly Ghazi headshot

Central Bankers Join the Ranks of Climate Activists

What do Extinction Rebellion, Greta Thunberg and the Bank of England have in common? They are all climate activists in their own unique way.
By Polly Ghazi
Bank of England

What do Extinction Rebellion, Greta Thunberg and the Bank of England have in common? They are all climate activists in their own unique way.

What do Extinction Rebellion, Greta Thunberg and Mark Carney, governor of the Bank of England, have in common?

All share a passionate concern for the looming human costs of climate inaction. Late last month, as Extinction Rebellion protestors occupied central London, and Sweden’s Greta Thunberg implored the European Parliament to heed climate scientists’ warnings, Carney and his fellow central bankers proved to be unlikely allies.  

In a strongly-worded Guardian article, Carney and his French counterpart, François Villeroy de Galhau, called for a “massive reallocation of capital” to address the climate threat.

The bankers’ call to action coincided with the publication of the first report by the Network for Greening the Financial Systems (NGFS). Made up of 36 central banks on five continents, whose economies emit half the world’s greenhouse gas emissions, the network seeks to coordinate collective financial sector action in support of the Paris Agreement goals. Members include Australia, Canada, China, Colombia, France, Germany, Mexico, the Netherlands, Singapore, Switzerland and the United Kingdom. The U.S. Federal Reserve is the most prominent absent institution.

The NGFS report, A Call to Action: Climate Change as a Source of Financial Risk, offers a blueprint for central banks, supervisors, policymakers and financial institutions to “green the financial system” and reduce disruptive climate-related financial risks. It urges all central banks to integrate climate risks in monitoring the financial stability of banking systems, and to lead by example by incorporating sustainability criteria in their own portfolios. Other recommendations include working together to plug data gaps, and share knowledge, to improve how financial institutions assess climate risks in a rapidly warming world. The report also backed the growing movement for consistent and transparent corporate climate risk disclosure, exemplified by the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures.

The NGFS has grown rapidly since its Paris launch with eight members in December 2017, by French President Emmanuel Macron. Central bankers’ interest in voluntary climate action reflects rising concern over the costs of climate impacts, including a fivefold increase in insured losses over the past three decades. In 2018 alone, insurers shouldered a record-breaking $160 billion in climate-related losses as intensifying heatwaves, storms, droughts and floods struck around the globe. Another concern is that banks lending to fossil fuel reliant companies may face steep financial losses if assets such as coal and oil deposits become stranded.  

The report marks a new willingness by central banks to wade into the climate arena. In their Guardian article, Carney and Villeroy de Galhau explained why: “The prime responsibility for climate policy will continue to sit with governments. And the private sector will determine the success of the adjustment. But as financial policymakers and prudent supervisors, we cannot ignore the obvious risk before our eyes.”

It’s the same argument that Extinction Rebellion, Greta Thunberg and her fellow student activists around the world make, as they protest in the streets and the corridors of power.

Image credit: Bank of England/Flickr

Polly Ghazi headshot

Polly Ghazi is a freelance sustainability writer, editor and communications strategist in Washington, DC. A former Environment Correspondent of the UK Observer, and senior writer-editor at the World Resources Institute, Polly has authored two books on sustainability and worked in the field for 25 years. 

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