Global database released for climate-related financial policies

July 14, 2023|Written by

A global database of climate-related financial policies has been developed to track current and future policy trends. The database captures various aspects of financial and non-financial institutions’ green financial policymaking between 2000 and 2020, including 39 advanced, 20 emerging, and 15 developing economies.

Contributing to the growing field of green central banking, the research provides crucial data for identifying and evaluating present and future trends in green financial policies.

Author Paola D’Orazio is a junior professor in economics at the Technische Universität Chemnitz and associate editor at the Eurasian Economic Review and PLOS Sustainability and Transformation. The newly developed database expands upon D’Orazio’s previous work on central banks’ climate ambitions.

Map showing spatial coverage of the database and the total number of policies adopted by each country as of December 2020.
The global distribution of climate-related financial polices. © Paola D’Orazio

The database sheds light on the pivotal role played by central banks and regulators in promoting green financing and addressing financial instability stemming from climate change. Used to develop the climate-related financial policy index, it enables researchers and policymakers to evaluate global engagement in climate-related financial policies.

Recent reports reveal that the majority of EU central banks are a long way from their climate and environmental goals and that there is a significant disconnect between climate scientists, economists, model developers, and financial institutions.

According to D’Orazio, “climate change is a historical issue that necessitates a global response. Despite progress in international engagement to fight climate change by reducing emissions, the global economy is still dependent on fossil fuels and other heavily polluting resources, and the window of opportunity to stabilise emissions safely is, however, rapidly closing”.

“Because climate change also threatens financial stability, mitigating physical and transition risks necessitates greater involvement from all policymakers, including central banks and financial regulators”.  

Line graph showing cumulated adoption of climate-related financial policies.
Cumulative adoption of climate-related financial policies since 2000. © Paola D’Orazio

Data shows that “the number of policies adopted each year has risen over time, reflecting a greater level of participation among nations”. However, D’Orazio says that “international engagement levels and climate-related financial policies adoption are too low to encourage an adequate low-carbon transition and protect the financial system from materialising climate risks”.

“Therefore, greater global commitment to promoting and adopting these policies is especially important as the Cop27 will likely uphold the 1.5ºC targets while following the IPCC’s advice to keep global warming below 2ºC”.

This page was last updated July 14, 2023

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