A major survey of central bank and sovereign wealth fund staff has found rapidly growing support for action on climate change over the past year, with most respondents saying climate mitigation falls within central bank mandates.
The 2021 Global Sovereign Asset Management Study, conducted by Invesco, has found that 63% of central banks now see climate action as part of their mandate, while 45% believe that mitigating climate change should be a monetary policy objective.
The annual survey on a range of topics received responses from 141 chief investment officers at 82 sovereign wealth funds and 59 central banks which together manage US$19 trillion in assets.
A majority of 63% agreed with the statement that “tackling climate change falls within the mandate of central banks”, up from 46% a year ago. Of the remainder, 22% were neutral and just 22% disagreed.
On the question of monetary policy, 45% agreed that climate mitigation should be a monetary policy objective – up from 41% since the 2020 survey – with 31% remaining neutral and only 24% disagreeing. The percentage of respondents viewing green bonds as a desirable foreign reserve objective also rose from 35% to 64% over the past year.
“The past 12 months has seen the dial shift on these objectives like we have seen with no other study,” say the report authors. They suggest the reasons for this change include European banks adopting ESG in anticipation of mandatory requirements by the European Central Bank, as well as reaction to the Covid-19 pandemic.
“The pandemic has definitely accelerated the ESG focus,” said Rod Ringrow, Invesco head of official institutions. “What we’re seeing is a greater social conscience and the need to incorporate it now as a matter of course and the pandemic may have been the catalyst to this ‘build back better’ approach.”
In 2019, a study of 135 central bank mandates found that 40% of central banks were explicitly mandated to support their government’s policy priorities (including sustainability goals), but only 12% had explicit sustainability mandates.
The study also found that climate risks to macroeconomic stability require all central banks to integrate this risk into their core policy implementation frameworks – a finding echoed in last year’s groundbreaking book, Green Swan, from the Bank for International Settlements.
This page was last updated July 14, 2021
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