For companies this could mean: -  Commitment to a net zero target (for scope 1, 2 and ideally scope 3 emissions) by a specific date;  -  Assessment and disclosure of how the transition to a net zero business model will impact strategy;  -  Short-term milestones to track progress; and  -  Details of governance, including whether executive compensation is tied to success and how risks are managed at the board level. These actions will also support growth and the FPC’s secondary objective. By pulling forward and smoothing the adjustment to net zero, it will minimise the costs of transition. And, crucially, by revealing which companies are aligned to net zero, and which are not, these actions will reveal the immense investment opportunities from the transition to net zero, increasing productive finance for sustainable infrastructure. VII. Conclusion  After engaging in an ambitious exercise to outline a Grand Unifying Theory of macroprudential policy, it is now time for a bit of humility. After all, if the experience of the financial crisis teaches us anything, it’s that we cannot anticipate every risk or plan for every contingency. And part of good macroprudential policy is literally planning for failure. 32  All speeches are available online at www.bankofengland.co.uk/news/speeches  32  Part of our job is to create a system that is robust to both the intensification of known risks and the crystallisation of Rumsfeldian unknowns. This is directly relevant for the current challenges associated with the coronavirus outbreak.

To resolve this, fair-burden sharing will be necessary among leading economies and different regions. Structural Reforms Economic recovery will continue to be restrained unless countries speed up structural reforms. An effective way to improve long-term economic prospects is to address structural rigidities that weigh down the efficiency of labor markets. It must be recognized that demographic challenges such as the aging of the population add pressure on the labor market and public finances. Increased labor market participation and restructuring of benefit schemes are therefore needed. Authorities and labor market participants have to work together in this effort. Other structural rigidities in financial and product markets are of no less importance, and removing such obstacles is conducive to growth. Many economies are burdened with government deficits in the midst of the global economic slowdown. Automatic stabilizers have been allowed to operate in order to support growth. This may be prudent and appropriate; however, care should be taken that public finances do not become unsustainable. Policy makers are responsible for planning both for the short and the longer term and we encourage governments to consolidate their fiscal positions in order to enhance their nations’ competitiveness. The Fund should continue to monitor closely structural deficiencies and advise accordingly. Good Governance Economic integration has brought increased prosperity to those who have been part of the globalization process. Increased globalization also implies intensified competition in most areas. Good governance is, therefore, more important now than ever because it fosters confidence and growth, without entailing much additional economic cost.