The report recommends that:
- Central banks should develop a brown taxonomy. They are uniquely concerned with the systemic risks to the financial system posed by such assets. Central banks, unlike national governments, are concerned by about financial institutions world-wide risks exposure and are not focussed on national boundaries which is how the Paris Agreement is framed
- Central banks’ asset purchasing programmes should be skewed towards buying green assets, including assets on the primary market.
- Central banks should test whether green supporting factors could be applied to offset some of the impact of using the brown penalising factors. Such a policy would encourage investment in green technologies through increasing the demand for the assets for regulatory purposes.
With support from WWF and SOAS Centre for Sustainable Finance.
Vaze, Prashant; Meng, Alan; Giuliani, Diletta. “Greening The Financial System: Tilting The Playing Field - The Role Of Central Banks”, Climate Bonds Initiative, 16 October 2019