Greening monetary policy and financial regulation to accelerate a shift of financial flows in support of the ecological transition
About the project
In the face of accelerating environmental breakdown, financial flows must urgently realign away from ecologically damaging and towards sustainable activities. This project aims to accelerate this shift by influencing monetary policies and financial regulations undertaken by central banks, financial supervisors, and other relevant policymakers. Our research has built the case for policy interventions to be taken on a precautionary basis. This is justified by both the radical uncertainty of climate change and biodiversity loss and the catastrophic consequences of policy inaction. We have identified certain green financial policies as sensitive intervention points that have the potential to catalyse a green transition in the real economy, as well as avoid the emergence of ecological tipping points.
Over the course of this project, which was initiated in 2018, sustainability goals have steadily been moved up the agendas of financial policymakers, and IIPP research has had significant impact contributing to this progress. The ‘precautionary financial policy’ approach has been referenced in policy documents by the White House, the Network for Greening the Financial System (NGFS) and the Canadian Senate as well as individual central bank research. Our work on nature-related financial risks was also cited in the influential Dasgupta Review on the Economics of Biodiversity, and our researchers contributed substantially to a study group launched jointly by the NGFS and the INSPIRE research network on ‘Biodiversity and Financial Stability’. We continue to collaborate with a number of individual central banks, as well as working in close partnership with other universities, foundations, think tanks, and NGOs on this agenda.
- Academic papers
- Chenet, H., Ryan-Collins, J., Lerven, F. van, (2021). Finance, climate-change and radical uncertainty: Towards a precautionary approach to financial policy. Ecological Economics 183, 106957. https://doi.org/10.1016/j.ecolecon.2021.106957
- Book chapters
- Kedward, K. and Ryan-Collins, J. (2022). A Green New Deal: Opportunities and Constraints, in: Arestis, P., Sawyer, M. (Eds.), Economic Policies for Sustainability and Resilience, International Papers in Political Economy. Palgrave Macmillan, Cham.
- Working papers
- Kedward, K., and Ryan-Collins, J. (2022). From financial risk to financial harm: exploring the agri-finance nexus and drivers of biodiversity loss. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2022-05).
- Kedward, K., Ryan-Collins, J. and Chenet, H. (2020). Managing nature-related financial risks: a precautionary policy approach for central banks and financial supervisors. UCL Institute for Innovation and Public Purpose, Working Paper Series (IIPP WP 2020-09).
- Policy briefs and reports
- Kedward, K., Buller, A. and Ryan-Collins, J. (2021). Quantitative easing and nature loss: exploring nature-related financial risks and impacts in the European Central Bank’s corporate bond portfolio. UCL Institute for Innovation and Public Purpose, IIPP Policy Report (IIPP 2021/02). Available at: https://www.ucl.ac.uk/bartlett/public-purpose/pr21-02
- Kedward, K., Ryan-Collins, J., Chenet, H., 2021. Understanding the financial risks of nature loss: exploring policy options for financial authorities (No. No. 115), SUERF Policy Briefs. SUERF: The European Money and Finance Forum. https://www.suerf.org/suer-policy-brief/27301/understanding-the-financial-risks-of-nature-loss-exploring-policy-options-for-financial-authorities
- Ryan-Collins, J. (2019). Beyond voluntary disclosure: why a ‘market-shaping’ approach to financial regulation is needed to meet the challenge of climate change [Online]. SUERF: The European Money and Finance Forum. https://www.suerf.org/docx/f_a821a161aa4214f5ff5b8ca372960ebb_4805_suerf.pdf.
- IIPP blogs
- Media and events
- Summary of research news coverage: https://www.ucl.ac.uk/bartlett/public-purpose/news/2020/oct/latest-iipp-paper-argues-nature-related-financial-risks-more-complex-climate-risks
- Project syndicate op-ed: https://www.project-syndicate.org/commentary/central-banking-green-transition-climate-change-by-mariana-mazzucato-et-al-2020-12
- Guardian feature: https://www.theguardian.com/environment/2021/jan/28/how-much-is-an-elephant-worth-meet-the-ecologists-doing-the-sums-aoe
- Katie Kedward gave evidence on the proactive policymaking for the green transition to the UK Trade and Business Commission https://www.youtube.com/watch?v=jYKiVJ69vYc
- Josh Ryan-Collins writes on the role of central banks in supporting a green transition in The Guardian https://www.theguardian.com/commentisfree/2020/may/26/banks-uk-recover-coronavirus