RBA and APRA score low in new ‘Green Central Banking’ report
The Reserve Bank of Australia and the Australian Prudential Regulation Authority have been given a combined grade of D minus for their environmental policies, in a new report from Positive Money.
This news comes just as the Labor Party has proposed to conduct a review of the central bank, should it win the next federal election.
The report reviews G20 countries' central bank policies through an environmental lens. As the authors put it, they cover a full range of policies and initiatives that an ideal green central back would adopt across four categories. These categories are: 'Research and Advocacy, Monetary Policy, Financial Policy and Leading by Example.'
How did the RBA and the APRA do?
Out of a maximum score of 130, the RBA and the APRA were together awarded only 15 points. Points were distributed between categories and for each one the governing bodies received:
- 10/10 for Research and Advocacy
- 0/50 for Monetary Policy
- 4/50 for Financial Policy
- 1/20 for Leading by Example
Positive Money awarded points for each category based on what relevant policies exist, how impactful they are and whether or not they have been implemented or are simply under discussion.
RBA and APRA: All talk, not enough action
You might have noticed that the RBA and APRA were given full marks for research and advocacy. This is not necessarily as noteworthy as it may seem at face value. In fact, 13 out of the 20 central banks scored received full marks in this area. The only central banks that did not were India, Russia, South Africa, Turkey, Argentina and Saudi Arabia.
The authors said the fact that a number of countries had scored highly for research and advocacy illustrated that actions are failing to match up with words. They said central banks are shying away from policies that disincentivise or restrict financial flows to environmentally harmful activities.
Research and commitment
Points the two bodies did receive were mainly for research and commitment. These included being members of the Network for Greening the Financial System and the APRA's recent commitment to undertake climate change financial risk vulnerability assessments.
In the 'Leading by Example' category Australia received one point for its 2019 environmental impact policy. None of the RBA's or the APRA's policies and commitments were rated as having a high impact in the report.
Where does this leave us?
The report concludes that 'encouraging the growth of more green economic activity is no substitute for institutions winding down their support for all the fossil fuel intensive and ecologically harmful aspects of our financial system.'
The report also criticises central banks for not prioritising climate risks in their Covid-19 crises responses. These central banks have failed to recognise the interconnections between pandemics and climate change, it says.
Finally, considering none of the central banks assessed received an A or B grade, it is clear that work needs to be done all over the world.
Head to our life and money hub to read more articles like this, including how the climate crisis will affect Australia's economy over the next 50 years and why B Corp certified companies are becoming increasingly popular.