From June 2nd to 4th, the International Monetary Fund (IMF), the Bank for International Settlements (BIS), the Network for Greening the Financial System (NGFS) and the Bank of France are organizing the “Green Swan” conference, which gathers a high-level panel to answer the question: How, in practice, can the financial sector take immediate action against climate change related risks? Ahead of this event, Reclaim Finance, Positive Money, the Climate Safe Lending Network (CSL), the New Economics Foundation (NEF), Re:Common, Greenpeace, BankTrack and Public Citizen are publishing a note that sets out four areas of progress to avoid the climate and financial catastrophe.
The briefing, entitled “The Green Swan Toolkit, Four Priorities for Ensuring Financial Stability in the age of Climate Change“, synthesizes the arguments put forward by various researchers regarding climate-related risks. It proposes an action plan for financial regulators to break the cycle by which finance fuels climate change, which in turn increases climate-related risks.
It proposes action on four key points:
- Adopt a precautionary approach to climate risk;
- Adapting Pillar 1 capital requirements to take into account the financial risks caused by fossil fuel exposures;
- Addressing systemic risk from climate change;
- Requiring the inclusion of climate criteria in the decision-making of financial institutions.