Time: 13:00-15:00 (UK Time), Wednesday, 15 March 2023
Presenter: Dr Yannis Dafermos, SOAS University of London
Discussants: Dr Oswald Mungule & Dr Jonathan Chipili, Bank of Zambia
Chair: Professor Victor Murinde, SOAS University of London

Abstract
Over the last years, private and public financial institutions have been paying a growing attention to the climate crisis. However, the ongoing attempts to make the financial system climate-aligned suffer from a significant limitation: they exacerbate global climate injustice. In this paper, I identify several climate finance injustice channels and explain how these can be addressed via the development of a ‘climate just financial system’. I define the latter as a system that has two basic features: first, public and private financial institutions incorporate climate justice criteria into their policies, and, second, the financing of private and public climate spending is in line with the principle of common but differentiated responsibilities and respective capabilities. A climate just financial system has three key elements: (i) differentiated climate responsibilities for Global North and Global South financial institutions, with the latter focusing primarily on climate adaptation and the former focusing primarily on climate mitigation; (ii) climate justice stabilising mechanisms that would commit Global North countries to provide, on a permanent basis, climate financing support to Global South countries without making the latter more financially fragile; and (iii) the incorporation of climate justice criteria in the design and use of climate mitigation tools by Global North financial institutions. Developing a climate just financial system would require a significant transformation of the role of development banks, national investment banks, private financial institutions, central banks and financial regulators, and would face several political and technical challenges. However, these challenges can be overcome if climate justice gets centre stage in the climate policy agenda.

JEL classification: D63, E50, Q01, Q54

Keywords: climate justice, climate-aligned development, central banking, climate finance

Presenter

Yannis Dafermos is a Senior Lecturer in Economics at SOAS University of London. He is also the Research Convenor of the SOAS Department of Economics, a Senior Fellow at the SOAS Centre for Sustainable Finance and a Fellow at the Forum for Macroeconomics and Macroeconomic Policies (FMM). His research interests include financial macroeconomics, climate finance, ecological macroeconomics, climate-aligned development and inequality. His work has been published in several peer-reviewed journals, such as the Cambridge Journal of Economics, Ecological Economics, Environment and Planning A, New Political Economy, the Journal of Financial Stability and Nature Climate Change. He has worked as Principal Investigator and Co-Investigator on projects funded, amongst others, by the ClimateWorks Foundation and the Economic and Social Research Council, and has run capacity building programmes on climate change for many central banks. He is a Committee member of the Post-Keynesian Economics Society (PKES), a Council member of the European Association for Evolutionary Political Economy (EAEPE) and a member of the editorial board of the journal Ecological Economics.