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Abstract
Concerns over climate-related issues have in a few years gone from the fringes of the financial sector to mainstream discussions in the boardrooms of central banks. How did we get here? Building on expert interviews, document analysis, and participant observation, this paper argues that think-tank-based ‘field arbitrageurs’ boasting financial sector careers and climate science expertise strategically advanced a risk-based frame dubbed the ‘carbon bubble’ through which they engaged central banks on climate-related issues. The frame went from the field arbitrageurs via civil servants with access to the corridors of decision-making power and then into the central banks. Thus climate-related issues came to be understood as a financial risk issue, which led to the idea of the conduct of climate stress testing. The article contributes to the study of the political economy of central banks, showing that the ‘climate shift’ was driven by actors outside the immediate remits of the central banking community in ways that highlighted an underexplored form of ‘infrastructural entanglement’ between finance, the state bureaucracy, and central banks.
Acknowledgments
My warmest thanks to Cornel Ban and Eleni Tsingou for their very generous advice, from this article’s inception through the review process. I would also like to thank Leonard Seabrooke, Matthias Thiemann, and Susan Park, as well as the three reviewers for their helpful, constructive, and encouraging comments that have improved previous drafts of this paper. I would also like to extend my gratitude to the participants at the panel ‘Regulating Finance I: The EU as a Global Leader?’ at SASE 2021 who have provided me with useful and elaborate comments on an earlier draft.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 For the sake of simplicity, I do not make a distinction between the granting of a new mandate of financial stability, or a reiterated focus on financial stability post-crisis.
2 Interview 12
3 2DII had close relations with state agencies in the French bureaucracy including the Ministry of Environment, ADEME, AFD (the French Agency for Development), and Caisse des Dépôts, the investment arm of the French state.
4 Interview 12
5 Interview 2, 3
6 See news story on the Green’s website from October 2011 ‘Caroline calls for green quantitative easing as Bank of England announces £75BN injection and report by Richard Murphy and Colin Hines for Finance for the Future: ‘Green quantitative easing: Paying for the economy we need’.
7 Open letter published in the news outlet Citywire 20 January 2012
8 The same story was outlined in interview 11 as well.
9 Interview 11 and unpublished manuscript 2
10 Interview 10
11 Cf. interviews 1, 2, 3, 12
12 Interview 1, see also letter sent from Mark Carney to MP Joan Walley, Chair of the Environmental Audit Committee 30 October 2014.
13 Interview 6, this is confirmed in the “Input from the Netherlands to the UNEP Inquiry Report”, June 2015
14 Turn of events as described in interview 1 and unpublished manuscript 1. An article from The Telegraph, 19 April 2015, confirms that the investigation was pushed by France (see Pritchard Citation2015)
15 Interview 1, see also FSB 2015.
17 Interview 2
18 Interview 5
Additional information
Notes on contributors
Stine Quorning
Stine Quorning is a Ph.D. student at the Department of Organization at Copenhagen Business School. Her primary research interests are in the political economy of central banking and finance with a focus on the emerging field of green central banking and sustainable finance.