A Quiet Revolution: Central Banks, Financial Regulators, and Climate Finance

Neil Gunningham
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Neil Gunningham: School of Regulation and Global Governance (RegNet), Australian National University, Canberra ACT 0200, Australia

Sustainability, 2020, vol. 12, issue 22, 1-22

Abstract: If the free market cannot deliver a low carbon financial revolution, what sort of interventions in financial markets might be necessary to do so? Using interviews, participant observation, document analysis, and applying regulatory theory, this article argues for (i) cross cutting mechanisms designed to curb short-termism, to leverage the social license of financial institutions and to expand corporate conceptions of fiduciary duty to embrace climate change; and (ii) approaches tailored to the characteristics of each individual industry sector. Institutional investors and banks are used as case studies to highlight the importance of third-party benchmarking, expanding rights to litigate, requiring pension funds to address climate risks when making investment decisions, and disincentivizing high carbon investments by bank clients. Finally, it shows that a multi-instrumental approach can create a web of regulation that is more resilient and effective than its individual constituents. Its principal contribution is to show how Central Banks and Financial Regulators (CBFRs) might best fast-track a low-carbon financial transition.

Keywords: central banks; financial regulators; climate change; climate finance; governance; regulation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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