Weekly roundup: Biden’s climate risk roadmap and RBA divestment fears

October 16, 2021|Written by David Clarke|Reserve Bank of Australia, Central Bank of Kenya, Federal Reserve

Australia’s climate inaction scaring investors, warns RBA

Australia could be hit by rising costs of capital and divestment by investors if it does not join other countries in committing to net zero emissions by 2050, the Reserve Bank of Australia’s deputy governor has warned. Speaking at an investment conference on Thursday, Guy Debelle said that climate risk was raised in “most conversations I have with foreign investors – this is a marked change from a few years ago”.

Although he said there have been relatively few divestment decisions to date, he expects this to be a growing trend unless there is a change of course. “Governments in other jurisdictions are implementing net zero policies,” he said. “Both of these are effectively increasing the cost of emissions-intensive activities in Australia.”


White House releases roadmap on climate risk ahead of Yellen’s FSOC report

The White House has released a roadmap for a government-wide effort to identify and mitigate climate-related financial risk, as directed by an executive order by President Joe Biden in May. The roadmap, published on Friday, makes clear that climate change poses systemic risks to the economy and financial system, and outlines a strategy for addressing these risks through regulation and financial management tools.

It comes ahead of next week’s much-anticipated Financial Stability Oversight Councilreport led by Treasury Secretary Janet Yellen, which is expected to offer more detailed recommendations for how financial regulators can reduce the threat that the climate crisis poses to the US economy.


Central Bank of Kenya issues climate risk guidance

The Central Bank of Kenya (CBK) issued banks with new guidance on managing climate-related financial risks on Friday. Closely matching the recommendations of the Taskforce for Climate-Related Financial Disclosures, the guidance is intended to enable banks to integrate the opportunities and risks arising from climate change in their governance structure, strategy and risk management frameworks.

In a statement accompanying the release, the CBK said, “This will be a key contribution in scaling up Kenya’s climate ambitions as the world gears up for the Cop26 summit in October.”


Bank of Mauritius launches climate change centre

The Bank of Mauritius has launched a new climate change centre aimed at integrating climate risks into the bank’s regulatory, supervisory and monetary policy frameworks, among a series of other objectives. European Central Bank board member Frank Elderson spoke at the launch on Thursday and said, “Climate change particularly impacts small island states. Establishing the centre and participating in the NGFS are important steps to help address this crisis.”

This page was last updated March 17, 2022

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