The effects of climate change are perceived as an additional risk element for the economy. Central banks understand that the financial system can act as an instrument to reduce this risk.
Discussions on climate change and possible solutions continue to be geared towards what the Brazilian presidency of the G20 is proposing. The analysis was made by Ambassador André Aranha Corrêa do Lago, Secretary of Climate, Energy and Environment at the Ministry of Foreign Affairs, after the second meeting of the group held on April 5 at the G20 headquarters in Brasilia.
"It was an interesting debate because there is an effort within the G20 to coordinate the different ministries (in Brasil and abroad) and have a coherent stance on the threats and opportunities that the effects from climate change represents," said Ambassador André Aranha Corrêa do Lago.
According to Marcelo Aragão, adjunct head of the Central Bank's International Affairs Department, the effects of climate change are perceived as an additional risk element for the economy. Central banks understood a decade ago that the financial system could be an instrument for reducing this risk.
Major disasters caused by changes in the climate cause not only deaths, but also damage to infrastructure such as the loss of roads and bridges. "The relation between climate change, the economy and the financial sector is becoming increasingly clear," stated Ana Toni.
Aragão commented, for example, that a large part of Brasil's population is located in coastal regions. If the ocean level rises in the coming decades, it means that not only the population, but much of the infrastructure and capital investment will be exposed to this situation. It is therefore important to consider where to invest and how to prioritize resources that are already insufficient. For this reason, "we have been working in partnership, internally and externally, in this network of relationships that is the G20, trying to find solutions and a way to mobilize efforts towards the common goal of mitigating the effects of climate change".
Ana Toni, national secretary of climate change at the Ministry of the Environment, agrees that climate risk is a financial risk and Brasil has already been facing serious floods and droughts that affect agriculture in the country. Major disasters caused by changes in the climate cause not only deaths, but also damage to infrastructure such as the loss of roads and bridges. "The relation between climate change, the economy and the financial sector is becoming increasingly clear," stated Ana Toni.
She recalled that Brasil is building a new Climate Plan with six mitigation areas, including industry, agriculture and land use. And the big question, not only for Brasil but also for other countries, is how to finance these plans. National platforms for attracting domestic and foreign investment was one of the topics discussed during the meeting.
The second meeting of the Task Force focused on the role of national just energy transition plans and the mechanisms for mobilizing resources to finance change. The meeting included representatives from more than 35 countries and 30 international organizations. Participants discussed about practical measures to strengthen risk reduction instruments for climate investments in developing countries.
The Task Force for a Global Mobilization against Climate Change aims to propose the changes needed to prevent temperatures from rising more than 1.5°C, as proposed by the Paris Agreement. Through coordinated responses from the Sherpa and Finance Tracks, the Task Force emphasizes the economic and financial issues linked to tackling climate change.
