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(CNN Business) —  

Central bankers and finance regulators have warned banks to act urgently to fight climate change or risk going bust.

The policymakers argue in a new report that banks must lend to responsible partners and invest sustainably or face severe economic disruption and a collapse in asset prices.

The Network for Greening the Financial System, which produced the report, includes 34 central banks and regulators from countries including the United Kingdom, France, Germany, China and Japan.

The group argues that financial companies face major risks from climate change.

Increasingly extreme weather threatens to disrupt trade, production and hurt economic growth, while increasing insurance payouts and squeezing property prices.

Another major risk from climate change is a sharp decline in the value of assets owned and traded by financial institutions. Potential examples include stock in oil companies or stakes in coal-burning power plants.

The group warned that climate risks are not being properly reflected in asset prices, and they pledged to take steps that will make banking more responsible and “green.”

“The enormous human and financial costs of climate change are having a devastating effect on our collective well-being,” members of the group, including Bank of England boss Mark Carney, said in an open letter.

The report recommends that central banks and other regulators integrate climate change risks into their supervisory activities — for example by stress testing banks on their vulnerability to climate change.

They should also help financial institutions decide which assets are sustainable and which are not, allowing them to make informed investment decisions.

The 2015 Paris Agreement asks countries to keep global warming well below two degrees Celsius above pre-industrial levels this century and, if possible, below 1.5 degrees.

The UN Intergovernmental Panel on Climate Change said last year that carbon dioxide emissions would need to fall by 45% from 2010 levels by 2030 and reach “net zero” around 2050 to limit warming to 1.5 degrees.

The agency said that doing so would mean huge changes in energy, industry, buildings, transportation and cities.

“If some companies and industries fail to adjust to this new world, they will fail to exist,” the policymakers said in their open letter on Wednesday.