The Bank of Canada is worried about the impact climate change can have on the economy and the financial system.
For the first time, the central bank’s financial system health report is considering climate change as an important vulnerability in their Financial System Review.
The review explores key weak spots and risks surrounding the stability of the financial system.
The bank says things like extreme weather events and the complex shift to a lower-carbon economy will now be incorporated into their research.
Transition to a greener economy will likely lead to difficult adjustments for carbon-intensive sectors, such as oil and gas which could expose insurance companies, banks and asset managers to more risks.
