The geography of climate change risk analysis at central banks in Europe

The potentially limiting nature of central bank mandates, together with non-existent standards to assess the impact of climate risks used to inhibit the incorporation of climate change considerations in central bank decisions. This paper analyses how, despite these challenges, climate change risk analysis spread among central banks by examining 941 European financial stability reports of 38 central banks in Europe and their source references. We show that the Dutch and Belgian central banks pioneered significant engagement with climate change risk in financial stability reports, followed by central banks in other Eurozone countries. Then the ECB stepped in, aggregated novel research methods into an accepted analytical framework, and moved to the centre of the stage of the process. Our analysis indicates that various types of proximity played a significant role in the spread of climate friendly central bank mandate interpretations and analytical techniques, but the engagement of a central player was crucial.