The COVID-19 pandemic has pushed climate change from the headlines, but it has hardly arrested it. In the last month, the warming Indian Ocean has encouraged swarms of locusts to hop from East Africa to South Asia. A dust cloud has drifted from the Sahara desert to the Americas. Wildfires have raged in the thawing permafrost of Siberia. This global crisis—like the one occasioned by the novel coronavirus, only more permanently—threatens to shock the global financial system. The consequences of climate change could lead to turmoil in the insurance and banking industries, while upending the energy sector, together producing a financial crisis unlike one ever seen before.
But before the pandemic scrambled economies, a group of global central banks and financial regulators led by Europeans had agreed on ways to manage the risks that global warming posed. These banks and regulators have since been forced to enact emergency measures to cope with the pandemic, so they have largely ignored, abandoned, or delayed many of their own prescriptions. Instead, they are now propping up the very coal, oil, and gas industries that ultimately threaten the financial system by accelerating climate change.
