Climate resilience is a critical priority that has been placed at the heart of the International Monetary Fund’s (IMF) work, according to the organisation’s Managing Director Kristalina Georgieva.
Georgieva’s remarks came during the High-Level Session of the Climate Adaptation Summit 2021.
“As we aim to exit the [novel coronavirus] COVID-19 pandemic, and the economic crisis it has triggered, we must face a greater threat, that of a changing climate,” Georgieva said.
She said that despite climate change being a fundamental risk to economic and financial stability, the world also now has the opportunity to reinvigorate growth and create new green jobs.
Georgieva said that IMF research shows combining steadily rising carbon prices with a green infrastructure push can boost global GDP over the next 15 years by about 0.7%. It also has the potential to generate work for millions of people.
“This is why, at the IMF, we embrace the transition to the new climate economy, one that is low carbon and climate resilient, that helps fight the causes of climate change and adapt to its consequences,” she said.
Georgieva added, “This means actions in four key areas, the first of which is integrating climate in our annual country economic assessments, our Article IV consultations.”
She noted that, in highly vulnerable countries, the IMF focuses on adaptation, and is building up mitigation analysis, including carbon pricing, in its assessments of large emitters.
“Second, we must include climate related financial stability risks in our financial sector surveillance, through standardised disclosure of these risks, enhanced stress tests, and assessments of supervisory frameworks,” she added, “Third, we must scale up climate in our capacity development, to help equip finance ministries and central banks with the skills needed to take climate considerations into account.”
Georgieva noted that the fourth area relates to the mainstreaming of climate indicators in macroeconomic data.
She noted that the IMF will launch a Climate Change Dashboard in 2021, with indicators to track the economic impact of climate risks and the measures taken to mitigate them.