FSB Secretary-General Warns Financial Incentives Are Required to Counter Climate Change

January 6, 2023

In a recent valedictory press interview, the Secretary-General of the Financial Stability Board (FSB), Dietrich Domanski, posited that attempts to convince banks to combat climate change will be insufficient without financial incentives because “[i]n the end we are talking about profit-orientated institutions” and “[a]s long as you do not provide the necessary price signals, which then translate into profits or profit expectations, there is a limit to what one can expect.” Domanski offered his view that these “price signals” “ideally” would be in the form of a global carbon tax.  Domanski also opined that regulators across the world are misguided in their increased use of “detailed and very expensive planning exercises” and stress testing to supervise climate risk. Instead, he suggested that a “market-based solution” would likely be more effective.

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