Climate Risks, Just Transition, and Central Bank Policy for Sustainable Economic Growth

Juhro, Solikin M. and Robinson, Irman and Rahadyan, Heru and Rishanty, Arnita (2024): Climate Risks, Just Transition, and Central Bank Policy for Sustainable Economic Growth. Published in: Jurnal Ekonomi Indonesia , Vol. 13, No. No 3 (December 2024)

Abstract

Climate change poses major challenges to the global economy and society, requiring coordinated efforts to alleviate its impacts. Given the nature of climate change, the adoption of central bank policies offers a more holistic strategy for managing and mitigating climate risks, thereby bolstering the resilience of the financial system and the economy. This paper aims to explore the critical tasks of coping with climate risks and proposes an integrated central bank climate regulatory framework to foster sustainable economic growth, by exploring the transmission mechanisms of central bank policies to support the establishment of just transition targets. The framework delineates three essential strategies, namely: (i) data, tools, and research, (ii) regulation and supervision, and (iii) climate transition policy. This paper shows that the central bank’s climate policies to manage transition risks can navigate just transition and support the achievement of sustainable economic growth. The operationalization of these strategies extends beyond the traditional purview of central bank activities, necessitating a collaborative and synergistic approach among regulators and industry stakeholders to guide the global economy toward sustainability.

• Item Type: MPRA Paper
• Language: English
• Keywords: climate risks, just transition target, sustainability, sustainable finance, sustainable economic growth, central bank policy.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O13 - Agriculture ; Natural Resources ; Energy ; Environment ; Other Primary Products; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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