The International Monetary Fund is starting to include climate change in its credit granting criteria

The International Monetary Fund is starting to include climate change in its credit granting criteria

The International Monetary Fund declared climate as a financing standard on the same day that Biden’s executive order refers to climate risk as a mandatory standard for U.S. investors.

to Cynthia Leon, ClimaInfo

The International Monetary Fund (IMF), an institution that countries turn to when insolvent, now includes climate among the criteria to be analyzed for granting credit. This is the main novelty introduced in the new edition of Comprehensive Monitoring Review (CSR), which will guide the fund’s decisions and advice to all its members in the coming years.

Director General of the International Monetary Fund, Kristalina Georgieva It was often mentioned that the IMF now views action on climate change as essential for global growth and economic stability. Last year, the International Monetary Fund also published an extensive modeling analysis of robust climate policies around the world that would support growth immediately after the pandemic, causing the economy to expand by about 0.7% over the next fifteen years.

The CRS is only implemented every 7 to 10 years, which is why the International Monetary Fund ignores climate risks in its latest reports. With this change, IFC will explicitly include climate change risks and impacts, including those arising from adjustments in the global economy, resulting from changes in energy prices and taxes. New monitoring standards may prevent the IMF from encouraging fossil fuel development in member countries, particularly in developing countries.

The guidelines will automatically make climate change perceived as a “significant deciding factor” in the Regular assessments (Annual habit) on the economies of the member states. The series of central reports, known as the revisions to Article 4, are parts of the policy directives for governments and help shape the way the world views countries.

Malango Mugogo, Director General of the ZeniZeni Sustainable Finance Foundation, highlighted that IMF reports on developing countries are influential among investors and bilateral and multilateral development finance institutions. “Therefore, it is imperative that the IMF develop its capacity to factor in climate change in its assessments and reports.“The analyst says.”But to be truly effective, a dashboard needs to be accompanied by a robust, open-source methodology for assessing and managing climate risks.Mugogo conclusions.

“Although the fund is finally realizing that there are “ transitional risks, ” the release of the International Energy Agency’s report earlier this week showed that not only coal but gas also represent an economic dead end that will have an impact on all countries because energy sources This is unsustainable. He retired more quickly than previously plannedSargon Nissan, Director and Researcher of the International Monetary Fund at the International Monetary Fund I think thank you Asylum, sanctuary.

“Effective monitoring of the IMF should draw attention to government actions that perpetuate an economic development model based on unsustainable fossil fuel commodities in every sense of the word.“Nissan says.”Treating climate as a critical component is welcome and belated, but the way the fund will work on it remains unclear and suggests that it will remain ad hoc and inconsistent.It is completed.

Developing countries

Despite this new signal, the report does not show that the IMF will adequately support countries to tackle climate change. It does not oblige analysts to consider climate risks in all countries, and says that a “special” approach will be taken to deciding when climate risks should be investigated. It is also unclear how the standard IMF advice to cut government spending can be reconciled with the need to invest in decarbonization.

“In the case of emerging and developing economies in particular, the IMF will need to expand its set of policy advice tools to support an equitable energy transition, including ensuring that countries have fiscal space to commit to climate – and thus avoid the worst effects of climate change.Argues Jon Sward, Environmental Projects Manager for the Bretton Woods Project, a monitoring system of the World Bank and International Monetary Fund.

United State

On the same day that the International Monetary Fund presented its new review of surveillance, President Joe Biden issued an Executive Order requiring federal agencies to consider climate risks imposed on the US government, financial system, and US citizens.

Although the United States lags behind countries such as France, the European Union, the United Kingdom, and Asian regulators in spreading climate risks, this begins a process of encouraging financial regulators and various federal administrations to assess climate-related risks.

Among the actions the order referred to was developing a strategy to identify and disclose climate-related financial risks among the federal government’s assets of $ 6 trillion. The decision also obligates the Department of Labor to protect American workers’ savings and pensions from climate-related financial risks, and repeals the Trump administration’s guidance that companies can ignore environmental, social, and governance factors in investment decisions.

Another change that has brought about is that major US government suppliers, from military contractors to major accounting firms, will need to define climate risks and set greenhouse gas reduction targets based on peer-reviewed science.

In EcoDebate, ISSN 2446-9394, 05/21/2021

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