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Despite needing to “play a critical role in catalyzing the rapid shift of financial flows away from oil, fossil gas and coal,” 12 major central banks “have instead tinkered at the edges,” according to a report released last week.
The new analysis from two dozen advocacy groups including Oil Change International examines financing and policies of central banks from Canada, China, the EU, France, Germany, India, Italy, Japan, Russia, Switzerland, the UK and U.S.
The report says that “with a few isolated exceptions — such as decisions by the French and Swiss central banks to partially exclude coal from their asset portfolios — central bank activity on carbon pollution and the climate crisis has been limited primarily to measures to increase financial market transparency.”
“While some central bank executives claim that tackling the climate crisis is beyond their mandates,” the report continues, “at the same time they have positively reinforced fossil fuel financing, and even directly financed fossil fuel production.”
“The science is clear,” the report emphasizes, noting that even the International Energy Agency now acknowledges that limiting global heating to 1.5°C this century — the more ambitious temperature target of the Paris climate agreement — requires keeping fossil fuels in the ground.
The analysis centers on 10 criteria for assessing how central banks’ actions align with the Paris agreement’s objective, examining asset management practices, rules and support for commercial banks, and policy and research.
David Tong, Global Industry campaign manager at Oil Change International and an author of the report, said in a statement last week that “central banks have access to powerful tools to confront the climate crisis, but they aren’t using them.”
“Instead of using their power to cut off finance for fossil fuels, they are making themselves busy tinkering around the edges of the climate crisis,” he said. “The climate crisis is too dire and too urgent for such critical institutions to be dawdling when they could be leading the finance sector in a new, climate-safe direction.”
This scorecard measures banks on 10 key indicators. Lots of red = not good! #StopFundingFossils
— Collin Rees #DefundThePolice (@collinrees) August 24, 2021
Each of the 12 central banks has its own section in the report — which comes as President Joe Biden is under pressure to appoint “a real climate leader” to head the U.S. Federal Reserve, currently led by Jerome Powell, whose term expires in February.
“In 2020, Federal Reserve (the Fed) executives began to refer to climate risk in speeches,” says the section on the U.S. central bank. “Simultaneously, however, the Fed worked to maintain and even increase fossil fuel finance from the United States, the world’s number-one provider of fossil fuel finance.”
The report highlights that “the Fed’s asset purchase programs launched in response to the coronavirus pandemic, were strongly weighted toward ‘dirty’ industries in general,