Financial regulators must stenghen their game

25 November 2022 - Foreword of the week - By : Julie EVAIN

One year ago the creation of the Glasgow Finance Alliance for Net Zero – GFANZ – was announced. The expectations were as big as the numbers: a coalition gathering 500 financial actors representing 130 trillion dollars. Private financial actors were finally stepping in and mobilizing. But one year later, the coalition raises many doubts. On one side it faces criticism from NGOs, and on the other some US actors are considering leaving the coalition under the pressure of members of Republicans Party.  

 

This is bad news. But not that bad actually. As explained by Michel Cardona in a policy brief that you’ll find in this newsletter, we should not expect too much from voluntary commitments from private actors anyway. Not only because they are voluntary, but because the committed actors are mostly refinancers of the economy, not primary actors, and their impact on the real economy is more limited than we think. To enable private finance to fully play a role and have a transforming impact, we need to see more action from public authorities and especially from financial regulators.

 

In this regard, the forthcoming vote at the EU Parliament on the Banking Package will be a test for the EU. It is likely that the regulators will ask banks to adopt “transition plans”. But as highlighted in a new study released today by I4CE, the effectiveness of this decision for climate will depend on the content of such plans and what kind of supervision is implemented afterwards. As always, the devil is in the details. And financial regulators must strengthen their game.

 

Read more

To learn more
  • 10/21/2022 Foreword of the week
    Public development banks in the spotlight: What we should be looking out for

    The end of the year is always a busy period for the climate finance world, with international events multiplying to take stock of the latest achievements in the implementation of the Paris agreement and to identify the next – more ambitious – steps to be taken by the international community. Though the climax of these […]

  • 06/08/2022
    Scenario analysis of transition risk in finance – Towards strategic integration of deep uncertainty

    The restructuring of the economy towards a low-carbon system will lead to develop activities that are aligned with the needs of a net zero economy, to restructure others in order to make them compatible with these needs and to stop harmful activities. The financial sector needs to anticipate these dynamics to address strategic risks and […]

  • 04/26/2022
    Include mandatory banking transition plans within Pillar 2

    The transition plans aim to establish a progressive decarbonisation strategy by 2050, in line with the European Union’s objectives. The European Central Bank, through Frank Elderson, as well as several NGOs are calling for transition plans to be made mandatory for banks and to be integrated into prudential regulation. This note first looks at why […]

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer