The Financial Sector’s Climate Imperative
It is impossible to say when the next financial crisis will erupt, let alone how long it will last or how damaging it will be. But there is no doubt that the risks the world faces merit a more holistic approach – one that accounts for the serious and escalating threats posed by climate change.
PARIS – In the decade since the global financial crisis, mechanisms to boost the financial system’s resilience have been widely discussed. But while some progress has been made, the largely piecemeal approach that has been pursued may yet prove inadequate to support long-term financial stability. And a waning bull market means that the day of reckoning may not be far off.
It is impossible to say when the next crisis will erupt, let alone how long it will last or how damaging it will be. But there is no doubt that the risks we face merit a more holistic approach, much like what was called for immediately after the 2008 crisis (though those calls lost steam as markets recovered). This means agreeing on and implementing a new vision for governing the global economy; assessing it rigorously and adjusting it as needed; and ensuring full accountability for every stakeholder.
This vision must comprehend profound and ongoing changes, from increasingly concentrated market power to increasingly automated decision-making. It must also consider China’s rise, which demands that China be incorporated more fully into governance bodies, which will have far-reaching implications, especially as the country emerges as a less benevolent global actor.