The International Monetary Fund (IMF) will track the economic impact of climate risks and mitigating measures given the fundamental risk to economic and financial stability with climate change, IMF Managing Director, Kristalina Georgieva, said during her speech at the Climate Adaptation Summit on Monday.
As the world exits the COVID-19 pandemic and the economic crisis, Georgieva said the threat of climate change must be met head-on by reinvigorating growth and creating new green jobs.
She cited IMF research that shows that combining steadily rising carbon prices with a green infrastructure push can boost GDP over the next 15 years by about 0.7% and 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.
The IMF Managing Director said that this transition to a climate-neutral economic environment is much needed with climate change turning into a global crisis.
Some headway has already been made as an increasing number of financial institutions are exiting fossil fuel sectors and are opting to boost green investments.
However, she said the transition requires action in four key areas.
"First, integrating climate in our annual country economic assessments. In highly vulnerable countries, we focus on adaptation and we are building mitigation analysis, including carbon pricing in our assessments of large emitters," she said.
According to global data provider Statista, China was the world's biggest emitter of fossil fuel CO2 emissions in 2019 and was responsible for around 28% of total emissions.
The US ranks as the second biggest emitter globally, generating 14.5%, while India follows in third place with around 7.2% of the world's emissions.
Russia and Japan are responsible for 4.6% and 3% of global emissions, respectively. Iran, Germany, Indonesia, South Korea and Saudi Arabia are also listed among the 10 largest carbon emitters.
She said the second action is to include climate-related financial stability risks in financial sector surveillance through standardized disclosure of these risks, enhanced stress tests and assessments of supervisory frameworks.
The third action involves scaling up climate measures in capacity development to help equip finance ministries and central banks with the skills needed to take climate consideration into account.
She said the fourth action the IMF will take is mainstreaming climate indicators in macroeconomic data.
"We will launch a Climate Change Dashboard this year with indicators to track the economic impact of climate risks and the measures taken to mitigate them. Climate resilience is a critical priority," Georgieva concluded.
By Nuran Erkul Kaya