Over the last few years, financial regulators have mobilised in response to climate change. They have pursued the two traditional objectives of financial regulation – financial stability and efficient market functioning – by encouraging financial actors to take account of the “risks” that climate change poses to them. This risk-based approach will not be enough to deliver on our climate objectives, and an increasing number of researchers are calling on financial regulators to do more, and to go beyond their traditional roles in order to contribute directly to financing the low-carbon transition. Regulators are very reluctant to take this path, especially where prudential regulation is concerned. Today, there is no real public debate on this issue, which is left to financial experts alone. It should nevertheless involve all stakeholders, as with the current debate on the use of monetary policy.
To drive and inform this debate, I4CE has explored the specific actions that financial regulators could implement in order to accelerate the financing of the low-carbon transition. This week you can discover the results of this analysis, with the publication of a new study, a summary for policymakers and a short video.
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Can financial regulation accelerate the low-carbon transition? Full report
To discuss the role of financial regulation in response to the climate emergency, it is important to determine whether it could truly contribute to financing the low-carbon transition, and how. Through interviews with business leaders, researchers, financial actors and French and European regulators, I4CE’s experts have identified three major obstacles to financing the transition on which financial regulation can act, and propose around 20 specific lines of action to be explored.
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Summary for policymakers
Incorporating climate impact criteria into financial actors’ remuneration, better training them on climate issues by developing their certification by the Autorité des Marchés Financiers (Financial Markets Regulator), developing the concept of fiduciary responsibility to take account of climate issues, incorporating climate criteria into the financial decisions of banks, etc. These are just some of the specific lines of action that you will find in the summary for policymakers of the latest I4CE study.
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Vidéo #2minOn #FinancialRegulation
This two-minute video gives you a first overview of the debate on the use of financial regulation for the climate and of I4CE’s latest study. Julie Evain gives clear and concise insights into how financial regulation could accelerate the financing of the low-carbon transition. A good introduction.
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The I4CE study will also be discussed in March in other forums, whether with academics or at the European level with policymakers, regulators, think tanks and NGOs. More information will be available in our next newsletters. Stay in touch!
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