Remarks by Ms Margarita Delgado, Deputy Governor of the Bank of Spain, at the High Level Panel on the climate-related role of the financial sector during the UN's COP25 summit.
The fight against climate change has traditionally been a top-down process. The starting point was always an international agreement that had to be transposed into supranational and national regulations; but what we are currently witnessing is a strong bottom-up movement occurring in parallel with this top-down process. People, in particular the young, are increasingly demanding their Governments act immediately and decisively, even if this affects their lives or pockets. Another revealing feature of this movement is that these efforts are being undertaken jointly by the public and private sectors. Many of the official initiatives currently under way are in collaboration with the private sector.
In sum, the fight against climate change is clearly not solely a publicly driven initiative. It is no longer the official sector preaching to the rest of the society but rather a joint effort by all stakeholders: Governments, Central Banks, Supervisors and Official Institutions, along with Corporates, Financial Institutions and, ultimately, all individuals.
The contribution that the financial sector can make to this global struggle is no silver bullet, but it is an important one. It is clear that finance is not regarded as a polluting sector. That, at least, is a positive development in these difficult times for banks´ reputation. Traditionally, the companies dependent on oil products have been those most affected by the environmental regulations resulting from international agreements. In fact, the financial sector’s involvement in this battle has been rather limited. Until very recently, climate change was seen as something outside our remit. This has changed as a result of the 2015 Paris Agreement.
In 2015, the Paris Agreement stressed for the first time the importance of the financial system for steering the resources needed to transform the economy towards a sustainable model. In 2018, the first NGFS report stated that climate-related risks were a source of financial risk, and that supervisors and central banks should shore up the system’s solvency in the face of these risks. Both elements, risk and funding, are clearly interrelated.
Full speech on BIS
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