Central Banks and Climate Change: Environmental Impacts on Economic Policies 
Ana Luci Grizzi
Environmental Partner, Veirano Law Firm, São Paulo, Brazil

 

Environmental matters, being climate change in the spotlight, should be evaluated by Central Banks and supervisors of the financial systems. The rationale is simple: environmental risks are financial risks. If a country’s economic stability is at risk, Central Banks and supervisors of economic policies must include the climate variable on their agendas.

There are three excellent examples of such new reality: (i) the response from the Chairman of the Board of Governors of the Federal Reserve System (FED) to the questioning presented by the North-American Senator Brian Schatz on April 18, 2019, explaining how FED uses its authorities and tools to prepare financial institutions for severe weather events ; (ii) the “Economic Letter” published by San Francisco Federal Reserve Bank on March 25, 2019, about climate change ; (iii) the Network for Greening the Financial System – NGFS, which was voluntarily created in 2017 and currently composed by 36 Central Banks  to “exchange experiences, share best practices, contribute to the development of environment and climate risk management in the financial sector, and to mobilize mainstream finance to support the transition toward a sustainable economy.”