Weekly roundup: climate change, stagflation and gender diversity

November 26, 2021|Written by Graham Caswell|Czech National Bank, Bank of International Settlements, Bank of Japan, National Bank of Belgium, European Central Bank

The climate crisis and global stagflation, gender diversity’s effect on emissions, TNFD developments, the Bank of Japan’s green lending facility and more from this week in green central banking.

Climate crisis and global stagflation

The climate crisis will bring global stagflation, finds an economic modelling exercise run by senior economists from the Czech National Bank and presented at a recent OMFIF roundtable event. The study used the National Institute Global Econometric Model covering 60 countries and regions and incorporating both physical and transition climate shocks. It found that climate change will have a global stagflationary effect overall and will need to be addressed by tighter monetary policy.

However a significant decline in real economic activity as a result of climate change can be avoided at the cost of higher inflation in the short term, the authors find, concluding with a call for the development of modelling tools capable of capturing climate-related risks.

Gender diversity and climate change

A new working paper from the Bank of International Settlements finds that a 1% increase in female managers within a firm leads to a 0.5% decrease in CO2 emissions. Firms with greater gender diversity reduced their CO2 emissions around 5% more than firms with more male managers, the study found.

“The relationship between female managers and carbon emissions can be considered in the light of the perils posed by global warming to women’s lives and their possible predisposition to counter this phenomenon,” the authors suggest, pointed to studies showing that women appear to be less overconfident and have greater perception of risk. They say that policies that increase the representation of women at management level have an impact on both gender diversity imbalances and fulfilment of the Paris Agreement recommendations, and they call for decision-makers to “kill two birds with one stone”.

Nature-related disclosures framework on schedule

The newly established Taskforce on Nature-related Financial Disclosures (TNFD) is on track to release a beta version of its global reporting framework and recommendations early next year, according to its latest newsletter. The new framework will measure the biodiversity impacts of financial institutions and corporations and is modeled after the Taskforce on Climate-related Financial Disclosures.

TNFD membership has risen to 35 senior financial industry executives divided into working groups focused on defining nature-related risks, data availability, standards and metrics, and pilot testing of the new framework.

The climate emergency and the role of law

European Central Bank (ECB) executive board member Frank Elderson has suggested that EU courts have a mandate to preserve fundamental rights, including climate rights. In a speech to the central bank’s legal conference on Thursday, Elderson echoed former UN high commissioner Mary Robinsonwhen he called climate change “the greatest human rights issue of our time” and compared recent climate-related judgements to the first seminal judgements on human rights after the second world war.

Elderson, a trained lawyer who is also chair of the Network for Greening the Financial System, has reviewed several major climate cases, including an ongoing legal action against the Belgian National Bank.

Bank of Japan’s green lending scheme

The week ended with the Bank of Japan (BoJ) revealing that 43 financial institutions have been qualified to receive loans under a new green lending scheme directed at emission-reducing activities. Financial institutions participating in the programme are required to disclose both emissions targets and the results of green investment and loans, as well as their progress in meeting disclosure rules. Three of Japan’s largest banks have qualified, the BoJ said, and the first auction for the loans will take place on 23 December.

This page was last updated November 26, 2021

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