It is essential to assess and address climate risk concentrations as financial systems may be underprepared. Monetary policy affects stakeholder behaviour and economic activity. It now needs to reflect a green footprint away from fossil fuels. Is the RBI ready for a green monetary policy? India’s financial regulators will soon need to start making public their position on climate-related financial risks. Postponement of a green monetary policy is not an option any more.

CLIMATE risk poses a great challenge to a country’s financial system, making regulators concerned. Investors are assessing climate risks in making investment decisions. Banks are feeling the pressure to offer green deposits, investment and loan products. Some serious questions are emerging. How will the balance sheet of my pension fund look when I retire? In what manner will my life’s savings and deposits contribute towards climate change? Are current disclosures by corporates meaningful or just patchwork? Do they achieve the purpose that they are set up for? How will stakeholders understand a company’s emissions? How will carbon emissions be aggregated and reported?

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