Mark Carney warns on climate change

Stating that “it may already be too late” to mitigate the effects of severe weather on long-term financial stability, Carney said investors in the fossil fuel industry were exposed should stringent climate action be adopted.

Speaking to the Lloyd’s of London insurance market, Mr Carney said the Financial Stability Board (FSB) of global regulators, which he chairs, is considering recommending that G20 nations develop a regime of “consistent, comparable, reliable and clear disclosure” of the carbon intensity of different financial assets.

“Shifts in our climate bring potentially profound implications for insurers, financial stability and the economy”, he said.

Although he did not attribute numerous world’s extreme weather events to man-made carbon dioxide emissions, Carney argued the evidence that man plays a role in climate change is becoming increasingly strong.

“While there is still time to act, the window of opportunity is finite and shrinking”, he said.

Mr Carney is the most prominent figure yet from the world of finance to set out his concerns on how climate-related issues could destabilise financial markets in the years to come. The far-sighted among you are anticipating broader global impacts on property, migration and political stability, as well as food and water security.

‘So why isn’t more being done to address it?’ For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade.

Earlier this month, Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, struck a downbeat tone when she said that pledges being made by governments ahead of COP21 would not restrict global warming to 2 degrees Celsius.

Climate change is a “tragedy on the horizon” that could trigger a new financial crisis and derail the economy, the Bank of England warned last night.

About 20 percent of companies listed on the FTSE 100 Index are fossil fuel extractors and 11 percent are utility companies, a share Carney said highlights the economic consequences of a low-carbon future.

“One idea is to establish an industry-led group, a Climate Disclosure Task Force, to design and deliver a voluntary standard for disclosure by those companies that produce or emit carbon”.

His speech was welcomed by Mark Campanale, founder of the Carbon Tracker Initiative think tank.

“With this report, investors will sit up and take notice of the potential risks and liabilities these companies face and begin to re-price this material risk”.