François Villeroy de Galhau: Climate economics - from the veil of uncertainty to three convictions for action

Speech (virtual) by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Central Banks and Supervisors Network for Greening the Financial System (NGFS) Annual Plenary meeting and Plenary Workshop, London, 25 June 2024. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and Gentlemen, dear friends,

The NGFS is dear to my heart and it is always a great pleasure to be among you, even virtually. I would like to warmly thank Chair Sabine Mauderer for her invitation to speak today at the NGFS Plenary meeting. 

While it began as a rather discrete initiative that eight of us took at the time in Paris, six and a half years later the NGFS has more than 140 Members. All in all, the NGFS has published more than 35 reports on topics such as supervision, transition plans, monetary policy, nature- Many of which have been praised for their quality and relevance, thanks to your work, and the global Secretariat hosted by the Banque de France. We did not take this initiative because we were climate advocates. We took it because we thought that, as central bankers and supervisors, we had a duty to care about climate change in order to fulfil our monetary and financial stability mandates.

Let me focus today on "climate economics", and on the NGFS macroeconomic scenarios. Since their release in 2020, we have constantly worked to improve them, "vintage after vintage". 

Some studiesⁱ released or published this year suggest that the macroeconomic consequences of climate change could amount to nearly 15% of GDP by 2050, higher than the 5% of chronic impacts (in green) that feature in the current NGFS scenarios, which however account for extreme events separately.