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China Report: Internalizing Climate Mitigation for Financial Policy-Makers

The paper also shows how the  objectives of financial policy-makers—such as investor protection, transparency, maintaining the safety and soundness of financial firms, financial stability, tackling systemic risk, reducing information asymmetries, tacking market failures and developmental objectives— offer multiple avenues to legitimize policy measures that can contribute to the greening of the financial system.

In particular, objectives of investor protection, financial stability, tackling market failures and mitigating systemic risk may actually not be achievable even in a narrow and conservative interpretation of mandates without explicit action from policy-makers to take climate mitigation and other important environmental matters such as water scarcity into account.

The last part of the paper discusses what tangible policy measures financial policy-makers can undertake to green the financial system and shows how these fit neatly into the existing objectives and mandates of regulators and the central banks.

[NB: This report is one chapter in the book Greening China’s Financial System]