Questão 741727

Could climate change trigger a financial crisis?

1 In recent years regulators have begun warning about

the threat that climate change poses to the stability of the

financial system. Following its strategy review in July, the

4 European Central Bank (ecb) will assemble a “climate

change action plan”. Mark Carney, the former governor of

the Bank of England, warned of financial risks from

7 climate change as long ago as 2015. In America the

Commodity Futures Trading Commission last year

published a 200-page report beginning “Climate change

10 poses a major risk to the stability of the US financial

system.” […] Just how damaging does climate risk stand

to be, though? Early stress tests by central banks and

13 disclosures of companies are starting to shed light on the

question. For the most part, the evidence that it could bring

down the financial system is underwhelming. But a lot

16 hangs on whether governments set out a clear path for

reducing emissions, such as through carbon taxes and

energy-efficiency standards, giving banks enough time to

19 prepare.

Climate change can affect the financial system in

three ways. The first is through what regulators describe as

22 “transition risks”. These are most likely to arise if

governments pursue tougher climate policies. If they do,

the economy restructures: capital moves away from dirty

25 sectors and towards cleaner ones. Companies in polluting

industries may default on loans or bonds; their share prices

may collapse.

28 The second channel is financial firms’ exposure to

the hazards of rising temperatures. Attributing individual

natural disasters to climate change is tricky, but the

31 Financial Stability Board, a group of regulators, estimates

that global economic losses resulting from weather-related

catastrophes went from \$214bn in the 1980s, in 2019

34 prices, to \$1.62trn in the 2010s, roughly trebling as a share

of global gdp. These losses are often borne by insurers

(though over time the costs should be passed on to

37 customers through higher premiums).

The financial system could also be exposed to any

wider economic damage caused by climate change, say if

40 it triggered swings in asset prices. This third channel is

harder to quantify. Academic estimates of the effect of 3°C

of warming (relative to pre-industrial temperatures) veer

43 from financial losses of around 2% to 25% of world gdp,

according to the Network for Greening the Financial

System, a group of supervisors. Even the gloomiest

46 estimate might prove too rosy if climate change triggers

47 conflicts or mass migrations. […]

Could climate change trigger a financial crisis? Available at:

<www.economist.com>. Retrieved on: July. 21. 2023, with adaptations.

According to the text, mark the statements below as right (C) or wrong (E).

The author presents three arguments to explain how climate change affects the financial system.