Urge central banks to take urgent action on climate change

The World Wide Fund for Nature (WWF), more than 90 organizations and NGOs, as well as think tanks and leaders, called on central banks and financial supervisors to use all available tools to address the crisis of biodiversity loss and climate change, “recognizing the financial risks they create.”

This call to action sets out tangible steps for central banks and financial supervisors to limit their impact on the environment and climate, protect against future risks and use their market role to affect wider change.

In addition, it emphasizes that today’s environmental impacts generate tomorrow’s risks and therefore, central banks and financial regulators must take preventive action.

“Central banks and financial supervisors are here to ensure financial and price stability. Without urgent action to better understand and manage climate and nature-related risks, they will have significant macroeconomic impacts,” said Margaret Cullow, Global Head of WWF’s Finance Practice.

The call comes as international economic policymakers are set to meet in crucial meetings in the coming months.including the G20 Finance Ministers and Central Bank Governors Meeting, the G20 Heads of State Summit, COP27 on Climate Change and COP15 on Biodiversity.

WWF and its more than 90 organizations and NGOs are calling on central banks and financial watchdogs to go green by 2030, limit global warming to 1.5°C and achieve net zero emissions by 2050 as key steps in their mandates.

Up to $24 billion in assets could be at risk from 2.5°C warming. – Photo: © Andy Kenworthy – WWF Colombia

Likewise, they should promote economic transformation by providing monetary policies and financial regulatory instruments that better reflect the economic cost and financial risk of economic activities, companies and sectors “always harmful to the environment”, as these assets represent the risks, higher financiers.

They also call for it to be done all financial institutions publish ‘credible’ transition plans for biodiversity and climate change.

According to WWF, monetary policy and financial regulation instruments should dealing with significant financial and price volatility caused by biodiversity loss and global warming, which will continue to increase.

Up to $24 trillion in assets could be at risk with 2.5°C warming.
Each year, WWF will monitor and report on the progress of central banks and financial supervisors in addressing this crisis. – Photo: Esteban Vega La-Rotta / WWF

The global economy and financial system are deeply rooted in nature, but nature is being lost at an unprecedented rate. By sequestering greenhouse gases, healthy ecosystems could provide 37% of the mitigation needed to limit global temperature rise to 1.5°C.

But climate change, human-caused habitat and biodiversity loss such as deforestation and land conversion, and other key drivers of nature loss are undermining this process and releasing more CO₂ than can be absorbed.

“New evidence on the impact of very high temperatures on prices also shows this extreme temperatures have a significant impact on price developmentsWWF assured.

Current rates of nature loss could cost the global economy $2.7 billion a year by 2030, and up to $24 billion in financial assets could be at risk under 2.5°C warming. “If global alarm is not reduced, it could create a world that cannot be insured due to climate risks and their impacts,” WWF warned.

He further assured that he will annually monitor and report on the progress of central banks and financial supervisors in addressing the twin crisis through the Central Bank’s Sustainable Financial Regulations and Activities Tracker (Susreg). The next assessment will be published in December this year.

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