So early action is important to lower the cost of the transition. If we are ever to reach net zero, a number of sectors are going to have to adapt their business models on a fundamental level. As  Page 6  the report sets out, it will be in the collective interests of financial institutions to support counterparties that have credible plans to adapt – and ultimately reduce their exposures to those sectors of the economy that are inconsistent with a net zero policy. [10] At the same time, the financial sector cannot run ahead of the real economy: we need real change to make the economy more energy efficient and expand the provision of renewable energy. While that process takes place, banks and insurers need to provide finance to more carbon-intensive sectors of the economy, precisely in order to allow them to invest in the transition. Cutting off finance to these corporates too quickly could prove counterproductive, and have wide-ranging macroeconomic and societal consequences, including through elevated energy prices – potentially akin to those whose negative effects we are experiencing today. Another key point for me is that no action on climate delivers the worst outcome from our scenarios. A naïve comparison of loss rates in the two net-zero scenarios and the NAA scenario might suggest otherwise; in fact for banks, credit losses were lower under no action than for late action. But this is misleading because of the very different end-points of the scenarios.
With the world economy now beginning to catch a cold from the slowdown in the US economy, the quality and competitiveness of our exports means that our companies are better equipped than others to hold their own in the global marketplace. Foreign trade not only represents Switzerland's growth driver, but it is also our friend when economic times are hard. BIS Review 45/2008  1