Central banks urged to take action on nature and climate

In a global call to action, WWF and more than 90 organizations and NGOs, think tanks and leaders are calling on central banks and financial supervisors to use all available tools to tackle the interconnected crisis of biodiversity loss and climate change, recognizing the financial risks , which create .

The same, endorsed by organizations including the United Nations Environment Programme’s Finance Initiative, the European Environment Agency, Nature Finance (formerly Biodiversity Finance), the Natural Resources Defense Council (NRDC) and the New Economy Foundation, states tangible steps for central banks and financial supervisors to limit their impact on the environment and climate, protect themselves from future risks and use their market role to influence wider change. The call to action emphasizes that today’s environmental impacts create tomorrow’s risks, and it is therefore up to central banks and financial regulators to take preventive action.

This call for action comes as international economic policymakers are due to meet in crucial meetings in the coming months, including the meeting of G20 finance ministers and central bank governors. the G20 Heads of State Summit, COP27 on climate change and COP15 on biodiversity. Signatories to the call to action call on central banks and financial supervisors to:

● Adopting a positive attitude towards nature by 2030, limiting global warming to 1.5°C and achieving net zero emissions by 2050 as key measures of their mandates.

● Promoting 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 that are “always environmentally harmful”, as these assets represent the most – the high financial risks. insofar as these resources represent the highest financial risk.

● Make all financial institutions publish credible transition plans for biodiversity and climate change.

● Require all regulated financial institutions to publish credible transition plans for biodiversity and climate change.

Monetary policy and financial regulatory instruments must address the significant financial and price volatility caused by biodiversity loss and global warming, which will continue to increase, according to this call for action.

In particular, WWF sees the meeting of finance ministers and central bank governors to be held in Bali on 13 and 14 October as a key opportunity for countries to turn commitments into concrete action and:

1. Treat biodiversity loss and climate change as a twin crisis and recognize the huge destabilizing effect it has on prices and financial stability.

2. Use a precautionary approach and work proactively and decisively to prevent future risks.

3. Recognize that today’s impacts are tomorrow’s risks and adapt financial regulation and supervision to a longer time horizon (10-30 years).

WWF points out that the global economy and financial system is 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.

He adds that climate change, human-caused habitat and biodiversity loss such as deforestation and land conversion and other key drivers of nature loss undermine this process and release more CO2 than can be absorbed. New evidence on the impact of very high temperatures on prices tIt also shows that extreme temperatures have a significant impact on price developments.

Recognizes that central banks and financial supervisors have recognized the threat that environmental crises pose to financial stability and general price levels and are committed to tackling climate change, biodiversity loss and supporting the transition to a global economy.

The call to action highlights that current actions, such as the disclosure of climate-related information, are not sufficient to protect against the risks posed by the twin crisis:

● Current rates of nature loss could cost the global economy $2.7 trillion annually by 2030.

● Up to $24 trillion in assets could be at risk with 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.

● Continued global warming may create an “uninsurable” world due to climate risks and impacts.

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