The economic cost of natural disasters is rising sharply. Global losses from natural disasters reached about $320 billion in 2024, nearly 40% higher than the average of the previous decade.
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Deputy Governor of the South African Reserve Bank (Sarb), Fundi Tshazibana, has warned that delaying action on climate change will make economic and financial risks far more difficult and costly to manage, urging stronger policy coordination and faster progress in building climate-resilient financial systems.
Speaking at the Sarb–Network for Greening the Financial System (NGFS) Research Conference on Wednesday, Tshazibana said the global policy conversation around climate change has become increasingly muted despite mounting environmental risks.
“While central banks continue to recognise the importance of tackling climate change and nature degradation, the global conversation surrounding climate policy has become uncomfortably quiet,” she said.
Tshazibana cautioned that complacency could have serious consequences, noting that the window for effective intervention narrows as environmental risks intensify.
“If we wait until climate risks become severe, solutions become more complex, costly and uncertain. Delaying action only increases the scale of the challenge and reduces our prospects for success,” she said.
She compared the climate challenge to everyday situations where early intervention prevents larger problems later, arguing that consistent, incremental actions can deliver significant long-term benefits.
“In the same way, the steps we take now towards our climate goals, no matter how incremental they may seem, are crucial; delaying action only makes the path more difficult and the outcomes less certain,” Tshazibana said.
Her remarks come against a backdrop of worsening climate indicators globally.
According to recent data from the World Meteorological Organization and the Copernicus climate monitoring programme, global average temperatures in 2025 were approximately 1.44°C above pre-industrial levels, while the three-year average from 2023 to 2025 reached 1.48°C.
Scientists have also warned that the risk of so-called “large-scale singular events” — tipping points that could trigger irreversible environmental changes — has increased as the world approaches the 1.5°C warming threshold.
At the same time, the economic cost of natural disasters is rising sharply. Global losses from natural disasters reached about $320 billion in 2024, nearly 40% higher than the average of the previous decade.
These escalating risks are already affecting financial markets, Tshazibana said, particularly through the growing withdrawal of insurance coverage in high-risk regions.
“This is leading to the rapid withdrawal of insurance coverage in high-risk areas, creating a ‘protection gap’ that threatens financial stability,” she said.
While central banks are making progress in integrating climate considerations into financial oversight, Tshazibana said their efforts are constrained by broader policy misalignment across governments and sectors.
“Our policy actions do not exist in a vacuum; they are often tethered to broader government decisions,” she said. “For instance, it is difficult for financial institutions to reduce climate-related exposure if energy policies continue to favour coal-powered generation.”
Policy coordination remains a major challenge globally and domestically, she said.
Recent projections from the International Energy Agency show that under current policies, global demand for oil and gas is expected to continue rising for the next 25 years, highlighting the gap between climate commitments and actual energy trends.At the national level, similar policy misalignment persists.
Tshazibana noted that only a small number of countries have clear mandates to improve policy coherence for sustainable development.
“These examples underscore a unique hurdle for central banks. While we traditionally worry about fiscal dominance, climate change has introduced a new reality: policy coordination dominance,” she said.
Beyond policy challenges, central banks must also navigate broader structural shifts in the global economy.
Rapid digitalisation and the integration of artificial intelligence are transforming how value is created, shifting economies from physical labour toward data-driven intelligence and automated decision-making.
At the same time, the green transition requires decarbonising traditional industries while meeting the rising energy demands of digital infrastructure. Geopolitical tensions and supply chain restructuring are adding further complexity.
Tshazibana warned that increasing geoeconomic fragmentation could slow global growth and split the global economy into competing blocs with restricted flows of technology and capital.
For Africa, these trends are contributing to what economists describe as premature de-industrialisation, with many countries moving directly from agriculture into service-led economies rather than following the traditional manufacturing-driven development path.
“This transition is driven by a fast-growing, digitally native youth whose skills do not match the needs of a fragmented, high-tech global market,” she said.
Tshazibana said central banks must adapt their policy frameworks to this evolving environment, as climate risks, technological disruption and geopolitical fragmentation increasingly influence inflation dynamics and financial stability.
“In the same way, climate action cannot rely on isolated policies,” she said. “It demands a coordinated, systemic approach that considers the wider structural challenges impacting our economies.”
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