On Green Swans and Catastrophic Futures: Climate change as risk and uncertainty in central banking

Abstract

This article analyses how central banks understand the financial risks thought to arise from climate change as uncertainty within complex systems rather than risk as something statistically measurable. In line with pragmatic sociology, I investigate what this uncertainty enables, instead of taking it to be an epistemological limit to knowledge. Analysing a 2020 publication by the Bank for International Settlements and Banque de France called ‘The green swan’, I show how ‘climate risk’ is framed as a ‘black swan’, a conceptualization taken from the field of complexity theory, meaning unlikely, extreme events that cannot be predicted, implying a critique of economic expertise. In the figure of the green swan, however, the statistically improbable climate crisis is additionally framed as a certainty. I argue that ‘the green swan’ through this tension works to include critique and value financial climate risk as a ‘good’ in order to provoke a precautionary response on this risk instead of proposing more explicit political measures on climate change. This demonstrates that while uncertainty challenges economic expertise, it also enables the linking together of the ‘good’ of the climate and the ‘good’ of the financial system, bringing them together in the politics of climate change.