The transition of the financial sector and its role in accelerating progress towards addressing the risks of climate change and breakdown of natural systems is firmly in the spotlight. Whether it is US Special Envoy on Climate, John Kerry, talking to banks about mobilising capital for green technology and clean energy; the rapid growth of the Network for Greening the Financial System (NGFS) as a forum for central banks and supervisors to collaborate on environmental issues; or former Bank of England governor Mark Carney’s position as COP26 Finance Adviser to the UK Prime Minister and UN Special Envoy for Climate Action and Finance, the role of finance is centre stage.

But are the proposed changes enough to meet the challenges of a planetary emergency? Given that we may have as few as six years left (e.g. until 2027) of carbon emissions at today’s rates before locking in climate change above 1.5 degrees (Matthews, Tokarska et al, 2021), are the scale and design of the regulatory changes in proportion to the significant behavioural shifts that are necessary? Do we have the right tools in the toolbox and the right discussions on the table?

In this report, the author highlights the need for a bold approach to financial regulation. One based on the premise that financial stability is 100% conditional on planetary stability. They outline practical policies a regulator could adopt if given the responsibility of regulating the financial system in line with the needs of society and the planet. Based upon a review of existing literature on climate risks and financial policymaking, together with interviews with leading thinkers on sustainable finance and policy, they outline 10 cutting-edge proposals, summarised below.