CSEP-IMF DIALOGUE ON CLIMATE CHANGE AND THE ECONOMY

Climate change represents a major threat to long-term growth and prosperity. The delayed transition towards a carbon-neutral global society will require a more challenging and abrupt transition if the 2015 Paris goals are to be reached. Recognising that climate and development priorities need simultaneous attention, emerging markets and developing economies (EMDEs), along with advanced economies (AEs), face significant challenges related to climate transition, such as the uncertain impact on growth and jobs of the transition to net zero emissions, how to finance mitigation and adaptation in the context of already high debt ratios, the potential negative spillovers from climate-related policies, the bottlenecks to a fair transition to climate neutrality, and the weak international cooperation on climate targets. This calls for an urgent need to integrate climate aspects into macroeconomic analysis and policy considerations.

Mainstreaming Climate in Macroeconomics

The macroeconomic dimensions of climate action have yet to be mainstreamed into macroframeworks used for policy analysis. Climate change poses multiple shocks and potentially large macroeconomic impacts. Understanding the transmission channels and impacts of both climate change as well as policies and financing to adapt to and mitigate climate change including transitions are important.To mainstream climate-macro dimensions, the IMF has been incorporating climate aspects throughout all the branches of its work—economic surveillance, research, and capacity development—when engaging with its member countries. Research on climate change also constitutes a major priority in the research programme at the Centre for Social and Economic Progress (CSEP).

Climate Finance

Beyond climate-macro considerations, stakeholders are increasingly focused on how the international financial architecture can be adjusted to accelerate climate finance. Under G20 Sustainable Finance Roadmap, G20 and relevant international organisations aim to identify the opportunities to promote scaling up of climate and sustainable-aligned financial instruments, products, and markets, while addressing climate-related financial risks. The IMF has established the Resilience and Sustainability Trust (RST) in April 2022 to help countries tackle the challenges of climate change through policy support and long-term affordable financing, while catalyzing much needed private capital. Leveraging official financing from existing sources (e.g., regional development banks, World Bank) and crowding in private finance, requires new thinking and international coordination.

Objective of seminar

This high-level event, co-organised by the IMF and the Centre for Social and Economic Progress (CSEP), aims at strengthening the policy dialogue on how to mainstream climate action in macroeconomic management, while considering the challenges faced by EMDEs. The event brings together leading policy makers from the region, think tanks, IMF staff, and other international financial institutions to discuss the integration of climate change into macroeconomic analysis and policies, the challenges and opportunities of climate action, and options for growth-friendly climate policies and financing.