 "Michael Patra")
Amid growing awareness of climate change's adverse effects, there have been some actions weakening the correlation between carbon emissions and global GDP growth. However, complete decoupling has not yet been achieved, Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India said at the New York Fed Central Banking Seminar on October 9.
“While the growing recognition of the adverse effects of climate change has led to some recent actions that are weakening the correlation between carbon emissions and GDP growth globally, an absolute decoupling is yet to happen,” said Patra.
Patra further said that central banks and financial institutions must actively address climate change, as it impacts their mandates of price and financial stability. He said that 23 per cent of countries have committed to net-zero emissions by 2050, 18 per cent have proposed legal obligations, and 59 per cent have made pledges in policy documents. These countries account for 73 per cent of global CO2 emissions.
“Almost all countries have committed to timelines for the transition to net zero emissions, with the majority committing to achieve this target by 2050. While 23 per cent of the countries have made the target a legal obligation, 18 per cent have proposed to make it into a legal obligation and the remaining 59 per cent have made their pledges in official policy documents. All these countries together account for around 73 per cent of global CO2 emissions,” he said.
Patra said that there is growing recognition that central banks and financial institutions are becoming major stakeholders in addressing climate change. He highlighted the Earth's changing climate over millions of years, emphasizing the recent rise in global temperatures.
The RBI has implemented initiatives such as mandating corporate social responsibility related to climate change, including renewable energy loans in priority sector lending, joining the Network for Greening the Financial System, conducting surveys on climate risk and sustainable finance, issuing sovereign green bonds, and introducing a framework for green deposits. Patra said that addressing climate change requires immediate action, emphasizing the importance of sustainable development and global collaboration to ensure harmony between humanity and the planet.
The deputy governor said that there was a growing recognition that even if governments were the most influential agency for climate change, central banks and financial sector regulators and supervisors were going to become the major stakeholders because financial institutions play a key role in intermediation and hence had a more direct role in addressing climate change; and climate change was impacting the achievement of their mandates of price and financial stability.
