In “Scared Central Banks Face Up to Threats From Climate Change” (Sept. 23) , Bloomberg News reported that “Most major central banks — with the exception of the U.S. Federal Reserve — are joining forces to promote sustainable growth, after realizing that climate change threatens economic output and could even sow the seeds of a financial crisis.” Now it appears that even the U.S. Federal Reserve Bank, or at least one of its components, the San Francisco Fed., is catching up to the rest of the world. Climate Change and the Federal Reserve drew attention when it was published by the San Francisco Fed in March 2019, and a special climate change-themed issue of the newsletter, Community Development and Innovation Review was published by the San Francisco Fed in October , highlighting independent economic analysis it had commissioned. The New York Times summarizes that research in “Bank Regulators Present a Dire Warning of Financial Risks From Climate Change ”.
The economic research was also highlighted in a conference on November 8. Host Mary Daly, President and CEO of the Federal Reserve Bank of San Francisco, introduced the event with a speech entitled, “Why Climate Change Matters to Us ” . Two highlighted conference papers: “Climate change: Macroeconomic impact and implications for monetary policy ” presented by Sandra Batten from the Bank of England, which explains why central banks care about climate change, and includes the warning that “for each degree the temperature rises above a daily average temperature of 59°F, productivity declines by 1.7%”. In “Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis “, six academics from the U.S., U.K. and Taiwan modelled the links between historical levels of temperature and precipitation and changes in labour productivity. They conclude that global GDP per capita could fall 7% by 2100 in the absence of climate change mitigation effects, but that loss could be reduced to 1% by conforming to the Paris Agreement.
Of related interest: SHARE Canada (Shareholder Association for Research and Education) summarizes the position of the major Canadian banks in an October 10 blog post “Responsible Banking – Part 2: Aligning finance with the goals of the Paris Climate Agreement .”