Mainstreaming climate change into financial governance

Introduction The role of the financial sector, which itself consists of a diversity of subsectors such as banking and insurance, in the economy is to match savers and investors, and to manage risks in line with fiduciary duties. [...] Known as mitigation and adaptation policies to the climate change community, climate policies aim to avoid the risks of catastrophic climate change with potentially far-reaching impacts on the global economy by reducing greenhouse gas emissions and increasing economic resilience and reducing vulnerability to the impacts of climate change. [...] Policy coherence and mutual support between the two policy regimes are important to ensure the success of the fight against climate change, as well as the stability of the financial system, at both national and international levels. [...] Bubble of High-carbon Assets A proactive dialogue between climate policy regulators and the financial sector could be started by increasing the visibility of In the absence of a well-planned shift toward a low-carbon the cost implied by climate policy for the financial sector. [...] The economy, neglecting externalities from investment decisions can signalling effect of credible national climate policy objectives and result in a carbon bubble, similar to the sub-prime mortgage international climate agreements can be of crucial importance bubble that led to the recent global financial crisis.2 Mitigating for reorienting the expectations and decisions of the financial climate c