Tshazibana urges urgent climate action amid policy divergence and structural shifts
South African Reserve Bank Deputy Governor Fundi Tshazibana called for urgent and coordinated climate action, highlighting the growing complacency amid structural shocks and policy divergence. Speaking at the NGFS Research Conference, Tshazibana stressed that delaying action increases costs and uncertainty.
Climate inaction's rising costs
The global conversation surrounding climate policy has become uncomfortably quiet, even as environmental risks have surged over the past 12 months.
Tshazibana emphasized that delaying action narrows the opportunity for effective intervention, drawing analogies to unattended roof leaks or untreated mould.
The World Meteorological Organization reported the global average temperature in 2025 was approximately 1.44°C above pre-industrial levels, with the three-year average reaching 1.48°C.
This sustained heating has upgraded the risk of 'Large-Scale Singular Events' to 'high'.
In 2024, global economic losses from natural disasters were US$320 billion, nearly 40% higher than the previous decade's average, leading to a rapid withdrawal of insurance coverage and a 'protection gap' that threatens financial stability.
The physical risks of yesterday have become the realities of today, impacting regions globally.
Policy coordination's formidable challenge
Central banks face significant hurdles in tackling climate change, as their policy actions are often tethered to broader government decisions.
It is difficult for financial institutions to reduce climate-related exposure if energy policies continue to favour coal-powered generation.
Furthermore, central banks are simultaneously navigating structural shocks like artificial intelligence (AI) integration and geopolitical fragmentation.
Tshazibana highlighted a global misalignment, citing the IEA's World Energy Outlook, which projects global oil and gas demand to rise for the next 25 years under current policies.
This global misalignment is mirrored nationally, with few OECD countries establishing clear mandates for national policy coherence for sustainable development.
This introduces 'policy coordination dominance', where central bank efforts are reactive due to a lack of synchronised response across other policy areas.
Effective policy coordination is critical for reducing transition and physical risks and accelerating the climate transition.
A wake-up call for collective action
The Deputy Governor's address serves as a critical reminder that climate risks are no longer distant threats but immediate economic realities.
Central bank efforts to green financial markets are undermined by broader policy incoherence and structural shifts like AI and geopolitical fragmentation.
This necessitates a coordinated, systemic approach, urging policymakers to move beyond complacency and act decisively.