{"id":10133,"date":"2021-03-31T01:01:38","date_gmt":"2021-03-30T23:01:38","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=10133"},"modified":"2023-02-15T15:43:45","modified_gmt":"2023-02-15T14:43:45","slug":"central-banks-are-not-matching-green-words-with-green-deeds","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2021\/03\/31\/central-banks-are-not-matching-green-words-with-green-deeds\/","title":{"rendered":"Central banks are not matching green words with green deeds"},"content":{"rendered":"

Central banks <\/span><\/span>increasingly talk about climate<\/span><\/span> change but fail to act on it. <\/span><\/span>That<\/span><\/span> i<\/span><\/span>s the key finding of a new report out today from research and campaign group Positive Money, <\/span><\/span>analyzing<\/span><\/span> the climate commitments \u2013 or lack thereof \u2013 of monetary and financial authorities across the G20.<\/span><\/span> <\/b><\/span><\/p>\n

All <\/span><\/span>bark, <\/span><\/span>no bit<\/span><\/span>e<\/span><\/span> <\/b><\/span><\/p>\n

Endorsed by <\/span>24 leading research institutes and NGOs, including Reclaim Finance, Positive Money\u2019s \u2018Green Central Banking Scorecard\u2019 <\/span>finds that <\/span>small steps forward from<\/span><\/b> central banks on sustainable research and advocacy<\/span><\/b> are, unfortunately, dwarfed by a dangerous lack of action<\/span><\/b>, above all on curbing fossil fuel financing<\/span><\/b>.<\/span> In cases where central banks have integrated climate into their policies, the focus has been on financial disclosures, stress tests (as the ECB carried out last week) and encouraging lending towards green assets.<\/span><\/p>\n

In fact, while 14 out of 20 central banks scored full marks on their research and advocacy efforts, <\/span>no bank <\/span><\/b>managed to score<\/span><\/b> even 50% overall<\/span><\/b>. <\/span>China tops this year\u2019s scorecard with an aggregate score of only 50 out of 130 (38%)<\/span><\/b>,<\/span> thus demonstrating the enormous gulf between <\/span>policymakers\u2019<\/span> stated aims to align with climate goals, and the underwhelming reality.<\/span><\/p>\n

European Woes<\/span><\/span> <\/b><\/span><\/p>\n

European central banks are increasingly vocal on climate change but rank between 3rd and 7th, <\/span>scoring between a third to a fifth of total points<\/span><\/b> and noticeably struggling <\/span><\/b>to score even a few points <\/span><\/b>on the criterion of monetary policy<\/span><\/b>.<\/span><\/p>\n

After recently <\/span>limiting<\/span><\/a><\/u> its investments in fossil fuels and advocating <\/span>proposals<\/a><\/u><\/span> to \u00ab\u00a0green\u00a0\u00bb the European Central Bank (ECB)<\/span>, the Banque de France <\/span>tops<\/span> European central bank, despite only achieving a third of all points<\/span>.<\/span><\/p>\n

However, the failure of <\/span>Eurosystem<\/span> central banks to implement the monetary and prudential measures needed for alignment with the Paris Agreement means <\/span>that <\/span>the Bank of England, which recently <\/span>pledged<\/a><\/u><\/span> to exclude large polluters from its asset purchases,<\/span> and which comes in at fourth place,<\/span> is expected to soon overtake<\/span> its counterpart across the Channel.<\/span><\/p>\n

The ECB Under Pressure<\/span><\/span> <\/b><\/span><\/p>\n

The ECB is emblematic of the report\u2019s findings.<\/span> While the launch of the bank\u2019s strategy review was followed by climate<\/span>-heavy<\/span> speeches and the acknowledgement of its importance for monetary policy<\/span> (<\/span>including with a new \u2018climate change centre<\/a><\/u>\u2019<\/a><\/span>)<\/span>, the concrete measures taken by the bank do not contribute to the fight against climate change nor correct its carbon bias. <\/span>The bank has taken no \u201chigh impact\u201d measures and the few measures implemented aim at better identifying climate risks, without adapting its monetary or prudential tools.<\/span><\/b> <\/b>Thus<\/span>,<\/span> it scores a lowly 15 out of 50 on financial policy.<\/span><\/p>\n

While the central banks of China and Brazil already implemented <\/span><\/b>first <\/span><\/b>measures on monetary policy, the ECB continues to delay<\/a> <\/span><\/b>action<\/span><\/b> <\/b>despite EU climate objectives being far more ambitious than the ones of Brazil or China<\/span>. The Governor of the Banque de France even underlined that integrating climate <\/span>could take \u201c3 to 5 years\u201d.<\/span><\/p>\n

T<\/span>ens of thousands of Europeans <\/span>have called<\/span> on <\/span>t<\/span>he <\/span>ECB<\/a><\/u><\/span> and the <\/span>Banque de France<\/a><\/u><\/span> to put their money where their mouth is and act<\/span> on the climate crisis<\/span> without delay.<\/span> This report should serve <\/span>as yet<\/span> another wake-up call.<\/span><\/p>\n

The immediate n<\/span><\/span>eed <\/span><\/span>for impactful policies<\/span><\/span> <\/strong><\/b><\/p>\n

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P<\/span>olicymakers <\/span>should<\/span> urgently<\/span><\/b> exclude unsustainable activities from the assets they purchase and accept as collateral for lending, and for financial regulation to penalise high-carbon lending<\/span><\/b>, with higher capital requirements to <\/span>more accurately reflect the risk of fossil fuel investments<\/span>.<\/span><\/p>\n

Th<\/span><\/b>e<\/span><\/b> wait-and-see attitude<\/span><\/b> among central banks exposed in this report<\/span><\/b> has for decades contributed to the destruction of the planet while <\/span><\/b>increasing financial risks<\/a><\/u><\/span><\/b>. <\/span><\/b>T<\/span>he NGFS itself underlined in a recent <\/span>report<\/span><\/a><\/u> that <\/span>\u201ccentral banks should be cognisant of the risk that acting early with imperfect information could be less costly than acting only once stronger data standards have emerged\u201d.<\/span><\/p>\n

David <\/span>Barmes<\/span>, lead author of the report, <\/span>summarizes the issue<\/span>: central banks have talked the talk, now they need to walk the walk.<\/span> <\/span><\/b><\/span><\/p>\n<\/div>\n<\/div>

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Find out more:<\/u><\/span><\/b><\/p>\n