Executive Director: Bank of England
The climate crisis has become one of the biggest threats to global economy, requiring the intervention of central banks. In this video, Sarah Breeden helps us understand the role of the Bank of England in supporting the economy from climate related risks. She briefly explains what science around climate change shows and then explains the future risks we face and the impacts that this will have.
The climate crisis has become one of the biggest threats to global economy, requiring the intervention of central banks. In this video, Sarah Breeden helps us understand the role of the Bank of England in supporting the economy from climate related risks. She briefly explains what science around climate change shows and then explains the future risks we face and the impacts that this will have.
The Bank of England was charged with promoting the good of the people of the UK nearly 300 years ago. Whilst this mission is centred around monetary and fiscal stability, their approach to fulfilling it has developed in tandem with the economy. Over the last few years the bank has begun to assess the impact that climate change will have on this stability, and now takes a front-row seat in the fight against climate change.
Key learning objectives:
Understand the role of the Bank of England in supporting the economy
Comprehend the underlying climate change science and statistics
Understand the risks associated with climate change
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The latest IPCC reports states that human influence has unequivocally warmed the atmosphere. The planet has warmed by around 1°C since pre-industrial times.
Existing country commitments on climate change are not enough to reach the 1.5°C target agreed in the Paris Agreement. Momentum of these commitments is growing, but more needs to be done.
There are two key risks that we face in the fight against climate change, physical risks (flooding and heatwaves etc), that will cause losses in infrastructure and productivity, and transition risks (unable to use fossil fuel reserves), which may cause assets to lose value and become ‘stranded’.
It is impossible to tell what combinations of physical and transitional risks we will see, but there will be risks.
Carbon released today remains in the atmosphere for years, so what we do now determines our future risks. To limit these risks, change needs to happen in the real economy. Consumers, corporations, governments and the financial system have a role to play in addressing these risks.
Swiss Re Institute estimates that if no further mitigating actions are taken against climate change, global GDP will be as much as 18% lower than it would have been by 2050.
This video is now available for free. It is also part of a premium, accredited video course. Sign up for a 14-day free trial to watch more.