Danmarks Nationalbank regularly provides its perspectives on economic and financial matters at various events and meetings. Speeches and presentations provide insight into Danmarks Nationalbank’s contribution to the event or meeting in question.

Monetary and financial trends

Governor Signe Krogstrup on financing the green transition and climate adaptation

Climate change can affect economic and financial stability in Denmark, as well as through developments abroad. This is why Danmarks Nationalbank considers climate-related risks as part of our work to ensure a robust Danish economy. Sustainable finance can support investment in the green transition and climate adaptation, but it cannot stand alone. Price signals, policy frameworks, well-functioning markets and coordination are important in ensuring that the necessary investments are made.

At a conference on sustainable finance organised by CBS and DTU on 10 November, Governor Signe Krogstrup focused on financing the green transition and climate adaptation in her speech, “From capital to climate resilience: why climate finance needs the right foundations”.

Investment needs are substantial, and developments in the sustainable finance market are important. At Danmarks Nationalbank, we publish statistics on sustainable bonds (link). However, the volume of sustainable finance is not in itself a measure of whether the necessary investments are taking place. Conventional finance also helps fund green investments.

Signe Krogstrup says: “We see investment in renewable energy in Europe increasing as the business case becomes stronger. These investments are not only about the green transition. They are also about Europe’s energy security and competitiveness.”

Whether investments in the transition and climate adaptation are made depends to a significant extent on economic incentives and policy frameworks. Carbon taxes, for example, can make lower-emission technologies more attractive, while credible and predictable frameworks reduce uncertainty for investors with long time horizons.

In her speech, Signe Krogstrup illustrated this point with examples of investment in storm surge protection in Denmark and electricity interconnections across Europe. Both are important for ensuring a resilient Danish economy, whether by protecting Danish coastlines against physical climate risks or by helping ensure that Europe has access to green, secure and competitive energy. In both cases, investment can generate substantial benefits for society, but requires clear frameworks for responsibilities, costs and cooperation.

Why is climate change relevant for Danmarks Nationalbank’s tasks?

Danmarks Nationalbank works to ensure a resilient Danish economy. We do so by ensuring stable prices, secure payments and stability in the financial system. Climate change can affect economic and financial stability, for example through volatile energy and food prices and losses on lending. It is therefore relevant for Danmarks Nationalbank to analyse climate-related risks alongside other risks, such as cyber threats and trade-related risks.

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