The Bank of Canada has announced that it will monitor how severe weather events caused by climate change could impact the prices that consumers pay for goods as part of its mandate to keep inflation within a 1% to 3% range.
The central bank's announcement was linked to the United Nations climate summit in Glasgow, Scotland and will see the Bank of Canada explain in a more public way how climate change impacts the Canadian economy.
The announcement comes just ahead of a report the central bank intends to publish about the risks climate change poses to the financial system, including granular details on sectoral impacts.
Although not officially part of the Bank of Canada's mandate, other central banks argue that they should take more of a leading role in helping economies adapt to climate change.
Speaking at this week’s climate summit, Bank of Canada Deputy Governor Toni Gravelle said policies to mitigate the impact of climate change will slow economic growth as carbon-intensive sectors that have helped fuel gains shrink.
He also said there could also be an impact on the financial system, noting the possibility of losses as prices drop for assets not considered as green as others.
It's why Gravelle said there needs to be better climate-risk disclosures from corporations so financial institutions understand their own exposure.
The Bank of Canada has been working with some of the country's largest banks to get a handle on what that risk looks like to help them and others in the financial system wrap their heads around the financial risk climate change poses.
That report, Gravelle said, is due out by the end of November or early December. It will include what he described as “how-to guides” for reporting risk.
