The leading central banks of the world have identified nine ways with which they can use monetary policy tools for risk management related to climate change. Among them - a more selective approach to the buying assets, which takes into account the influence of issuers on the ecology, and the inclusion of climate parameters in the bank lending scheme.
The topic of "landscaping" of monetary policy is regarded in the new report of the Organization for Enhancement of the Financial System (Network for Greening The Financial System - NGFS). Its members are 89 central banks and financial regulators supporting the goals of the Paris Agreement. The NGFS report analyzes the possibilities for protecting Central Banks from climate risks and supporting the environmental policy of their governments. Each of the proposed methods is estimated from the point of view of effectiveness in combating climate risks and impact on monetary policy.
"This is a real milestone, the first of its kind, offering Central Banks around the world nine options for solving problems related to climate change. This is a set of tools, and every central bank can decide which it is most suitable depending on its powers, jurisdiction and the relevance of climatic risks "Over the past year, the issue of global warming has gained increased importance for many central banks. For example, the powers of the Bank of England were expanded, the monetary policy should now take into account the need to transition to the green economy. The Federal Reserve System of the United States after the victory in the presidential election Joe Bayden decided to join NGFS. And the European Central Bank made climate change an important part of the analysis of its strategy.
One of the most debate issues in the context of "landscaping" of a monetary policy concerns the parameters of the program of buying bonds:
Does the central banks, what do corporate bonds acquire, sell paper companies responsible for large amounts of carbon dioxide emissions and acquire more bonds of more environmentally friendly companies?
The NGFS report provides two ways to link the buyer of corporate bonds with climate change issues:
- shift the focus on the paper of issuers whose activities are better in compliance with the selected climatic indicators;
- Analyze and eliminate the assets, issuers or sectors from the program, whose share of the largest volumes of emissions, such as the power plant operating on the corner.
The second way, which at the beginning of this year began to implement Swedish Rixbank, is called a tougher and radical approach to combating climate change and reduce risks associated with it. However, a more effective approach, which to a lesser extent invade the sphere of the monetary policy itself, will, according to the authors of the report, the focus displacement strategy, which the chairman of the Bank of France Francois Vilroua de Galo recently proposed. She "can have less serious consequences for the policy that the direct and large-scale exception" of the papers from the buying program, refers to the report.
NGFS suggested four ways to change the rules for receiving collateral from banks (for example, reduce the mortgage value of assets with a higher intensity of carbon dioxide emissions). She also reviewed three ways with which central banks can make their own lending to more relevant environmental principles:
- offer a reduced financing rate to banks whose own lending meets certain climatic criteria (Central Bank Bangladesh does so since 2009);
- reduce financing rate for banks offering as a deposit asset with a lower carbon footer;
- To determine access to your financing - for example, banks should achieve a certain parameter in green lending or disclosure of information on climatic risks.
World banks have been provided in 2020 by coal, oil and gas companies in the amount of $ 750 billion, referred to in the Rainforest Action Network Group. The most significant increase - in the French bank BNP Paribas: 41% to $ 41 billion. And this is despite the fact that it positions itself as a leader in green financing and has adopted an obligation under the UN supported program to bring its loan portfolio in line with the goals of the Paris Agreement. Limit the growth of global temperature 2 ° Celsius. For the period after signing the Paris Agreement, BNP Paribas issued companies working with fossil fuel, $ 121 billion.
The largest financiers for such companies are still American banks. According to Rainforest Action Network estimates, JPMorgan Chase and Citigroup banks since 2016 issued them loans and organized bonds of bonds a total of $ 317 billion and $ 238 billion, respectively. True, in 2020 they reduced such funding: JPMorgan - by 20% to $ 51 billion, and Citigroup is 9.4% to $ 48 billion.
So far, only a few central banks, including the Bank of England, tried to calculate the carbon footprint of their own actions within the framework of the monetary policy. Maderemer called on other to take similar actions, because "it is important to show an example."
True, this will not be easy both due to problems with data collection and methodological reasons, the report says. As an example, bonds provided by assets are given, which central banks buy and take pledge: numerous bank loans are combined in them, according to which it is often impossible to collect data on the effect on the climate.
Translated Mikhail Overchenko