Weekly roundup: Climate food price inflation in Turkey and ECB protests

IPCC AR6 report

Monday was dominated by the release of the UN Intergovernmental Panel on Climate Change’s (IPCC’s) sixth comprehensive assessment report on the physical science of climate change. The report was analysed in depth by Carbon Brief, first in a comprehensive Q&A and later in a look at what the new IPCC report says about when the world may pass 1.5C and 2C. The report offers much greater certainty of predicted climatic effects under different greenhouse gas emissions scenarios and introduces two new emission pathways. The IPCC assessment shows that we all need to urgently step up our efforts to limit the impact of climate change, European Central Bank (ECB) President Christine Lagarde tweeted in response to the release.

Central Bank of Chile focuses on environmental risk

The Central Bank of Chile (CBC) has accepted an invitation from the Ministry of the Environment to join a committee measuring the stock of natural capital in Chile, it announced Tuesday. The decision is part of a broader agenda focusing on economic-environmental interactions and the risks derived from nature´s deterioration, the Bank said in a press release. An Environmental Economics Group has been established within the bank with the aim of developing and implementing the Bank’s climate and environmental research agenda towards “a model of economic growth which respects the protection of nature and the well-being of future generations.” The new group will be coordinated by Elias Albagli, head of the central bank’s monetary policy division.

The Central Bank of Chile recognised the risks of climate change to Chile’s financial system in its 2019 financial stability report and joined the Network for Greening the Financial System (NGFS) last year.

Elderson on the value of “patchy data”

The SUERF association of central banks, financial industry representatives and academics released a policy brief(7) from NGFS Chair and ECB Executive Board member Frank Elderson, on Thursday, focusing on the failure of European banks to meet ECB climate-related expectations. Progress on climate risk management by EU banks has been slow, Elderson says, partly due to the lack of reliable climate-related data and standardised climate risk indicators. However “patchy data” is a good start, he insists, pointing to national accounts data as particularly useful. “There are risks to acting on the basis of partial data,” Elderson concludes, “but in the case of climate change and environmental degradation, the risks of inaction are far greater.”

Climate behind food price rise, says Central Bank of Turkey

Climate change is behind recent food price inflation, the Central Bank of the Republic of Turkey (CBRT) said Thursday in a press release from its Monetary Policy Committee. “The increase in inflation in July was driven by the rise in food inflation, due to supply-side effects in some products led by climate conditions,” the Bank said, identifying high international prices and the Covid-19 pandemic as additional contributing factors. The CBRT joins the Banco de Mexico (Banxico) and the Banco Central do Brasil (BCB) in facing inflationary pressures as a result of climate-induced rises in food prices.

Turkey remains the only G20 country that has not ratified the Paris Agreement and ranks at the bottom of international comparisons of central bank and financial regulator action on climate. The CBRT is not a member of the Network for Greening the Financial System (NGFS).

Protestors label ECB ‘climate killers’

The week ended with crowds of climate activists gathering outside the ECB’s Frankfurt headquarters to protest the continued funding of climate-damaging fossil fuel activities by the central bank and the European financial system. Activists from Greenpeace, Urgewald, KoalaKollektiv and other groups demanded that the ECB accelerate the climate action timeline outlined in its recent strategy review and immediately exclude fossil fuel companies from corporate asset purchases. The groups also called for a precautionary approach to climate risks and for the integration of climate risk metrics into the ECB’s own ratings.

Video of the protests posted on Twitter showed hundreds of demonstrators, many of them young people associated with Greta’s Thunberg’s Fridays for Future movement.