Hopefully, it's not too late

Shareholders are celebrating long-fought climate wins at some of the world’s largest corporations, but a potentially more powerful financial movement is on the verge of exploding as central banks join the fight against greenhouse gas emissions.

The Bank of England this month launched a climate exploratory scenario. The Bank of France recently concluded its first climate stress test pilot. The European Central Bank will begin testing significant banks against climate risk in 2022. The central banks of Australia, Brazil, Canada, Hong Kong and Singapore are planning climate stress tests this year and next.

“The time for voluntary bank action has passed,” said Maximilian Horster, head of ISS ESG, the responsible investment arm of Institutional Shareholder Services. “There is no place to hide.”

The U.S. Federal Reserve has no mandate to help reduce greenhouse gas emissions, nor is it conducting climate analysis. Yet.

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The European Investment Bank issued a “climate awareness bond” in 2007 and the World Bank had a climate-related offering a year later. Both were aimed at “shifting the trillions” — green-speak for deploying capital to projects that can slow global warming or prepare for its impact.

More than a decade later, cumulative green bond issuance has barely exceeded $1 trillion.

Sustainable debt made up only 6 percent of the market for investment-grade bonds in 2020 but is growing rapidly and hit 11 percent in the first three months of 2021, according to data from Deutsche Bank.

  Politico