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Central Banks, Climate Change and Leadership: Women in FICC


In the early days of the pandemic, central banks took swift action to help sustain their economies. That type of leadership helped stave off imminent economic panic, but central banks have also taken the lead on addressing the financial risks posed by nonfinancial issues, particularly climate change.

As part of the 16th Annual Women in FICC Industry Forum, we hosted a panel of three central bankers to get their thoughts on climate change and the insights they gained during the COVID-19 pandemic:

  • Nikki Rupert, sustainable finance officer at De Nederlandsche Bank, the central bank of the Netherlands.

  • Marie Gabreau, senior trader analyst secondment at the Bank of Canada / Banque de France.

  • Sabrina Wu, senior trader on the domestic trading desk for the Bank of Canada. Wu served as the moderator for the discussion.

We also discussed leadership in the wake of COVID-19 with Susan le Jeune d’Allegeershecque, who has been Britain’s High Commissioner to Canada since August 2017.

Following is a summary of those conversations.

Central Banks and Climate Change

It’s become clear that climate change presents risks on multiple fronts, including to global financial systems. Rupert explained that the 2015 Paris Agreement was the turning point for the Dutch central bank. Soon after, the bank concluded that climate change posed two challenges: the transition to an energy-efficient economy to help reverse the effects, and the physical risks associated with climate change—such as human displacement—which can also translate into financial risks.

Rupert said De Nederlandsche Bank’s first climate change report, published in 2017, wasn’t universally well received. “At the time some people thought we were crazy,” she said. “Why would a central bank look into these topics? But what we said in that report was that we see these climate-related risks that are relevant to the Dutch financial sector, and we expect Dutch financial institutions to analyze these risks, be aware of these risks and manage these risks if they are relevant for your institution.”

While some critics see the focus on climate change as being too politically charged, Banque de France’s Gabreau noted that the fact central banks had to respond to the pandemic demonstrated the evolution of the role beyond their traditional purview. "This health crisis impacted the economy and the financial system, and it proved how all these areas are interconnected and intertwined,” she said. “So, there is a need to address environmental issues in a more holistic way for sound growth and to maintain financial stability as well.”

Rupert noted that, moving forward, financial institutions will start to report more broadly on nonfinancial factors that could pose financial risks down the road. “As a central bank, sometimes you need to look beyond the traditional risks, and you have to look a bit further in the future and a bit broader to see all the possible risks that are coming your way,” she said.

Leadership Lessons

As Gabreau pointed out, “One of the major lessons of this past year is in an ever-changing environment, central banks demonstrated resiliency, adaptability and flexibility, and that nothing is set in stone.”

D’Allegeershecque, Britain’s High Commissioner to Canada, certainly knows a thing or two about those qualities.

Over her 30-year diplomatic career, she has tackled issues such as Brexit and taken part in the negotiations that led to the Iran nuclear agreement. But she said leading staff through the pandemic was one of the biggest challenges of her career, and one that put her leadership skills to the test.

D’Allegeershecque said she’s learned that, in times of crisis, trust is the most critical trait for effective leadership. That trust must be reciprocal, but it’s not easily earned.

“That trust is not something that you can create overnight when the crisis hits you, so it's something that I have always tried to do in my jobs,” d’Allegeershecque said. "I’ve noticed that the leaders in my own organization who have been particularly effective are the ones who embrace that trusting form of leadership.”

D’Allegeershecque is well aware of the erosion of the public’s trust in various institutions, particularly government and the media. She was encouraged, however, by how the pandemic has restored some of that trust.

“I think what we have seen is that when people have trust in their governments, and when governments make decisions based on facts—not feelings, not emotions, not vote winning—our populations are incredibly well-disposed to do things which would have been unthinkable before this pandemic happened,” she said.

Part of that comes from clearly communicating why certain difficult decisions are being made. But d’Allegeershecque also emphasized that being a strong leader cannot come at the expense of empathy.

"Seeing glimpses of the struggles of some really senior people as they try and homeschool their kids has been a salutary for all of us, and it has shown that we're all facing the same challenges,” she said. “And I think it's no coincidence that many of the people who've done this best happen to be women. I don't think it's universally the case, but some of the leaders who have come out of this with their reputations and their popularity enhanced are the female leaders.”

Despite all the challenges of the previous year, d’Allegeershecque has worked with the Canadian government on the transition of a post-Brexit trade agreement with the U.K., as well as encouraging Canada to adopt ambitious climate change goals. For d’Allegeershecque—as well as the central bankers who have pressed forward with their climate change ambitions—resiliency is the key.

“I've dealt with lots of crises in my career,” she said. “Whether it's a coup, whether it's a kidnapping crisis, whether it's a political crisis—those things tend to be fairly short-lived. This has been very different, and every time we think that we are getting to a better place, there has been another set of challenges that have come to confront us. Some of those challenges have been expected and some of them have been completely unexpected. The importance of resilience in leadership cannot be overestimated.”

Read more
Deland Kamanga Head, Global Markets

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