ECB protesters tell central bankers don’t ignore climate fight

Bloomberg

Christine Lagarde’s first day as the new president of the European Central Bank in Frankfurt protesters were brandishing a sign reading: “If the Earth was a bank you’d have long rescued it.”
The march by some 150 people to the ECB’s headquarters — following a similar demonstration at the Bank of England last month — highlighted how technocrats tasked with something as narrow as price stability can be drawn into one of the most emotive issues of the day. Nathalie Bromberger, a cartoonist from the German city, was among those saying the institution must broaden its
horizons.
“The ECB should stop thinking in its narrow categories of just saving banks and financial markets,” she said. “I’m aware they don’t have the mandate, but really they should use their money responsibly to help protect our ecosystem.”
Most central banks, preoccupied for the past decade with financial crises, have only lately started acknowledging that global warming might become a battleground. Yet 93% of Europeans consider it to be a serious problem, and pressure is building on monetary authorities to use their regulatory power and $12 trillion in reserves to help.
It’s a controversial topic. Some officials have embraced it on the grounds that climate risk equates to economic risk, while others have warned that they could wander so far outside their core mandate that they end up causing more harm than good.
In general, the focus is on three areas where central banks can have an impact: financial stability, investing, and —most contentiously —green bonds in monetary policy.

Financial Stability
BOE Governor Mark Carney has pioneered attempts to address the environmental risks to financial stability. In 2015, he said investors need to wake up to the potential for huge losses, for example in the repricing of fossil-fuel investments in the move towards a lower-carbon economy. He recently said industries that don’t adjust will be punished by investors and face bankruptcy.
The European Central Bank included climate change in its Financial Stability Review this year, warning of problems if markets don’t correctly pricing the risks stemming from extreme weather events and the transition to reduced emissions.

Investing
Central banks have their own finances to manage, and that provides an opportunity to set an example by making such investments environmentally friendly.