Why Big Central Banks Are Becoming Climate Warriors

The world’s largest central banks have been joining the fight against climate change, figuring that they can’t ignore the mounting risks of doing nothing. Melting glaciers may be a huge leap from monetary policy, but policy makers say they must respond to threats that have the potential to disrupt the global economy. While the warnings from these powerful regulators echo what scientists and protesters have been saying for years, their voices can’t be ignored in corporate boardrooms.

A mounting body of research suggests that climate change poses a threat to price stability and a risk to the financial system, two traditional purviews of central banks. Even if goals set in the 2015 Paris Agreement to limit global temperature gains are met, the fallout could include lower output on farms and construction sites, increased migration and more deaths from heat and other climate factors. That’s on top of property damage from extreme weather and coastal flooding that could total trillions of dollars by 2100. To raise awareness, activists from the movement Extinction Rebellion staged several protests outside the Bank of England in 2021, while Greenpeace environmentalists paraglided onto the roof of the European Central Bank in Frankfurt.