Swedish central bank sells Australian state bonds because of poor climate work

The central bank of Sweden, Sveriges Riksbank, has sold its holdings of bonds issued by the Australian states of Queensland and Western Australia because of the states’ large climate footprints.

It should be noted here that the bank also dumped bonds issued by the Canadian province of Alberta because of the same reason in the spring.

In a speech on “Monetary Policy in a Changing World” at Örebro University and Kommuninvest, Örebro, last week, Riksbank Deputy Governor Martin Flodén talked about the bank’s new risk and investment policy, saying that Australia and Canada “are not known for good climate work.”

“Greenhouse gas emissions per capita are among the highest in the world, but vary considerably between the different states,” said Flodén. “For instance, greenhouse gas intensity is more than three times higher in production in Alberta than in Ontario and Quebec.”

Flodén stated that climate change influences the way the economy works. He said its impact is mostly seen in the insurance space, as a direct consequence of the risks of climate-related damage.

Going forward, Flodén said the Riksbank will not invest in assets issued by issuers with a large climate footprint when the bank is picking other assets than those best matching its policy requirement.

Flodén, however, noted that US and German government bonds unavoidably dominate the foreign exchange reserves.

“The Riksbank’s contribution to a better development of the climate will therefore remain small,” Flodén said. “This is entirely natural. The important decisions on how climate change should be counteracted in Sweden are political and should be taken by the government and the Riksdag (parliament).”

The transcript of Flodén’s speech can be read on Sveriges Riksbank’s website.

Images via Press & Published page of Riksbank's website