Sweden’s central bank said it sold bonds issued by Alberta, Canada’s oil-producing province, and parts of Australia, citing high greenhouse gas emissions in both countries. Suddenly Australia was seen as an investment bank at the central bank level. Last week Martin Floden, deputy governor of Sweden’s riksbank, announced the sale of bonds issued by the Canadian provinces of alberta and the Australian states of Queensland and western Australia because Australia and Canada had “failed to take good action on climate issues”.
They see climate change as a factor affecting their ability to manage economies to maintain financial stability. In a speech in March, reserve bank of Australia deputy governor Guy Debelle said we need to stop thinking of extreme weather as cyclical. “We need to see it as a trend rather than a cycle. Drought is often viewed as cyclical. But climate change is a trend. The impact of trends is long-lasting, while the impact of cycles is temporary.” The path to a less carbon-intensive world depends on how it is managed – gradual or abrupt – and will make a significant difference. A trend change cannot be smooth. Trends can fluctuate, and above-trend changes can be disruptive.”
The rba and other central Banks are not just dealing with the effects of climate change. They are trying to mitigate its effects. Central Banks, traditionally focused in part on liquidity, safety and returns, are starting to factor climate change into how they invest. They are increasingly investing in “green bonds “, securities whose proceeds are used to support projects to combat climate change or biodiversity and natural resource depletion.
https://www.sbs.com.au/news/climate-change-why-sweden-s-central-bank-dumped-australian-bonds