The transition of the financial sector and its role in
accelerating progress towards addressing the risks
of climate change and breakdown of natural sys-
tems is firmly in the spotlight. Whether it is US Special Envoy on Climate, John Kerry, talking to banks
about mobilising capital for green technology and
clean energy; the rapid growth of the Network for
Greening the Financial System (NGFS) as a forum
for central banks and supervisors to collaborate on
environmental issues; or former Bank of England
governor Mark Carney’s position as COP26 Finance
Adviser to the UK Prime Minister and UN Special
Envoy for Climate Action and Finance, the role of
finance is centre stage.
But are the proposed changes enough to meet the
challenges of a planetary emergency? Given that
we may have as fewas six years left (e.g. until 2027)
of carbon emissions at today’s rates before locking
in climate change above 1.5 degrees (Matthews,
Tokarska et al, 2021), are the scale and design of
the regulatory changes in proportion to the sig-
nificant behavioural shifts that are necessary? Do
we have the right tools in the toolbox and the right
discussions on the table?
In this report, we highlight the need for a bold
approach to financial regulation. One based on the
premise that financial stability is 100% conditional
on planetary stability. We outline practical policies
a regulator could adopt if given the responsibility
of regulating the financial system in line with the
needs of society and the planet. Based upon a
review of existing literature on climate risks and
financial policymaking, together with interviews
with leading thinkers on sustainable finance and
policy, we outline 10 cutting-edge proposals. This is No 6 in the ALIGNING FINANCE FOR THE NET-ZERO ECONOMY: THOUGHT LEADERSHIP SERIES
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