Again? ♻️

What is a Bank?

Most people do not even know how many things a Bank does, and surely most of the people think that those folk who works there is rich AF and just think about money.

A Bank in essentially an intermidiary, between lender and borrowers. There are in the world as well special Banks, the so called Central Banks.

These are special, because they manage a country’s monetary policy, trying to maintain its economic system as well the labour market. So…what does it have to do with climate change?

A recent report by the Centre for Economic Transition Expertise (CETEx) at the London School of Economics, published on July 23, 2025, warns that central banks worldwide may be ill-prepared for the labor market disruptions caused by climate change. The study highlights that even under optimistic scenarios limiting global warming to 1.5–2°C, climate change is expected to significantly reduce labor productivity, particularly in sectors like agriculture and construction that are sensitive to heat.

Up to 1.2 billion workers across 182 countries are at risk of severe disruptions due to climate impacts.

And now what? 🏦

Labour market shocks usually mean unemployment. Which often lead to social unrest.

The CETEx study reveals that only 15 out of 114 central banks explicitly include employment as part of their primary or secondary objectives.

Institutions like the Bank of England and the U.S. Federal Reserve have recognized employment in their mandates. However, many central banks focus predominantly on price stability and financial stability, potentially overlooking the employment impacts of climate change.

The Network for Greening the Financial System (NGFS) has modeled scenarios where climate-related disruptions could lead to a 5% decline in GDP in developed regions and even steeper losses in emerging markets.

Policy needed

To mitigate these risks, the CETEx report suggests:

• Integrating Environmental Employment Risks: Central banks should incorporate climate-related employment risks into their monetary policy frameworks.

• Supporting just transitions: Implementing policies that facilitate the transition to low-carbon economies while protecting vulnerable workers.

• Enhancing climate Risk Assessments: Developing tools to assess and manage the economic impacts of climate-related labor disruptions.

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