The economic impact of climate change is steadily climbing up the list of concerns among central bankers, according to UBS’s Annual Reserve Manager Survey 2024. The survey of 40 central banks, managing around half of the world’s foreign exchange reserves, found 16% consider climate change one of the “main risks” facing the global economy. While climate came behind issues like war, inflation, economic volatility, surging government debt, and energy security, the 16% figure represents a sharp increase on previous years. In the same survey last year, just 8% of respondents listed climate change as a main concern. And back in 2019 – a year when climate peaked as a public and political concern, with mass protests globally and the launch of the EU Green Deal – not a single central banker had named the issue as a main economic risk. This year, the top concern among central bankers (87%) by far was further escalation of geopolitical conflict, including between China and the US, and in Russia and the Middle East. In addition, 71% of respondents cited inflation or rise in long-term yields as key concerns, and 50% mentioned economic volatility. Asked which financial assets they planned to increase exposure to, green bonds topped the list, with 57% of respondents saying planning to buy more of these instruments. Meanwhile, the supposed ESG backlash in the US does not seem to have registered among central bankers. This year, 47% said they had updated or were considering updating their benchmarks to include ESG factors, up from 27% last year.
