The challenge of climate change and the green transition are high on the agenda, but it is not understood that this whole process will not be easy and will mainly come at a cost.
The Minister of Finance Konstantinos Petridis and the Governor of the Central Bank Konstantinos Herodotou, speaking at the 12th Limassol Economic Forum, raised perhaps for the first time all the difficulties we face.
As supervisors, we are concerned that the banks are not ready to face the economic consequences that will be caused by the implementation of policies to address climate change, warned Konstantinos Herodotou.
Regulators, he added, are concerned that banks are not currently prepared for the financial and non-financial risks that may arise from the economic impact of disasters at the national level, which will affect property prices and the resulting costs. from policies to the transition to a low carbon economy, which will also affect property prices.
The Governor of the Central Bank reminded that in 2022 a climate stress test will be conducted for the banks, under the direct supervision of the ECB. The ECB has concluded that the economic costs of climate change will be much higher if there is no timely adaptation and mitigation of climate change.
Mr. Herodotus stated that “the Mediterranean region is even more prone to climate change. “It is warming 20% faster than the global average, putting additional pressure on already stressed ecosystems and vulnerable economies.”
We need to “accelerate our efforts, as scenario analysis shows that the economic and social conditions of climate change will be profound and substantially greater if there are no timely and effective adaptation and mitigation strategies.”
The green transition will have a very significant cost and will also affect vulnerable groups of the population, said on his part the Minister of Finance Konstantinos Petridis.
“The management of economic policy after the pandemic will be quite different from the pre-pandemic era, with incredible challenges, both for Cyprus and for the European and international development”, noted Mr. Petridis.
“Economic policy is changing with the Green Deal. It is the answer to give our children a different planet “, but the green transition (…) will not be easy. We must be very careful in designing these policies, so that they do not create distortions that we do not want or unfairly affect certain groups of the population, or the competitiveness of the Cypriot and European economy. “
Managing climate change is a marathon that has not yet begun. Cypriot society and business have not even begun to work out what needs to change.
