The Globe and Mail reports in its Tuesday, May 28, edition that the Bank of Canada has released its 2019 Financial System Review. The Globe's guest columnists Christie Stephenson and Kevin Quinlan write that the BOC listed climate change as one of six major vulnerabilities facing Canada's economy. It has identified the physical and transition risks of climate change as vulnerabilities facing Canada's financial system.
This is important because when the bank speaks, people listen.
It is easy for Bay Street or Alberta Premier Jason Kenney to dismiss warnings about climate risk when they come from think tanks or environmental NGOs. It is a lot harder to ignore those warnings when they are coming from the BOC, known for its data-driven reports and inherently cautious nature -- an institution acutely aware that its words move markets.
An issue highlighted as a particular concern is the limited understanding of climate-related risks in financial markets. The bank warns that the lack of transparency around carbon exposure could lead to mispricing and ultimately increased costs of transitioning to a low-carbon economy.
The BOC's statements match those of the Bank of England and the European Central Bank.
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