The Green Central Banking Scorecard

Update: the Green Central Banking Scorecard was updated in November 2022.

This groundbreaking study from UK research and advocacy group Positive Money ranks the responses of G20 central banks and financial supervisors to the climate crisis.

The full range of policies and initiatives that an ideal green central bank would adopt are comprehensively reviewed, and a ranking system developed based on a literature review, expert consultation, and bilateral interactions with central bankers and supervisors.

Each country is assigned scores across four categories: research and advocacy; monetary policy; financial policy; and leading by example. Aggregate results are then displayed as a scorecard, with each G20 country ranked on the green policies and initiatives of their monetary and prudential authorities.

The report begins with a review of the arguments for including environmental objectives in monetary and prudential policy, and highlights how Covid-19 strengthens the case for a more proactive and interventionist role for central banks. It then examines how green monetary and financial policies are developed in practice, before offering an overview of the policy options central banks and supervisors can implement to incorporate environmental considerations across their operations and policy decisions.

The results show that not a single high impact climate-related policy has been implemented by any G20 monetary or prudential authority. While most achieved full marks on research and advocacy, they scored very poorly across the other three categories, suggesting that “their actions aren’t living up to their words”. G20 central banks and financial supervisors clearly have a long way to go to align their operations with the Paris agreement and avoid a climate catastrophe.

The report concludes by identifying three fundamental reasons for central banks’ poor results in the exercise. For most, climate and ecological breakdown is still a relatively new topic that technically challenges their preferred toolkits and principles. The tragedy of the horizon is another reason, given that central banks and supervisors place greater weight on short-term transition risks than longer term physical risks in their decision-making. Finally, market-fixing approaches, such as the voluntary disclosures of climate risks, are still favoured over more precautionary and proactive market-shaping policies.

Endorsed by 24 civil society organisations focusing on finance and climate change, Positive Money’s comparative Green Central Banking Scorecard brings civil society accountability to central bankers and supervisors as they respond to the accelerating climate emergency. It is intended to be the first in an annual review of central bank performance on climate.

The Green Central Banking Scorecard includes detailed case studies of leading central banks and supervisors and contains an extensive appendix covering the climate-related central banking and supervision activities in all G20 countries. US advocacy group Public Citizen has also published a supplement report focusing specifically on the US context.