The South African Reserve Bank's (SARB) Financial Stability Review (FSR) released last week had a section on the climate crisis. The Covid-19 pandemic has the immediate attention of policymakers, but the SARB is not taking its eye off the big picture.
The Covid-19 pandemic is keeping policymakers awake at night. But the challenges raised by the climate crisis are not going away even as global CO2 emissions - linked by most scientists to changing weather patterns - have temporarily declined in 2020 because of the economic havoc wreaked by the pandemic and lockdown measures to contain it.
"The focus of policymakers globally has shifted to Covid-19, but climate change is still one of the biggest threats facing the world today. It is causing long-term variations in temperatures and weather patterns, threatening everything from food security to national infrastructure," the bank's Financial Stability Review (FSR) noted.
The SARB said it was "concerned about two distinct classes of climate risk" - physical risks and those linked to the transition to cleaner, greener forms of energy.
Physical risks include "the increasing frequency and severity of climate change-related events" which the SARB said could inflict substantial losses on banks, insurers and...