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Bank of England Governor Warns of Climate Risk to Financial Stability

Bank of England Governor Warns of Climate Risk to Financial Stability post image

Bank of England governor Mark Carney has issued a blunt warning about the risk climate change poses to future financial stability, if sufficient action is not taking now, the BBC has reported. Mark Carney told the BBC, “The challenge is that if there’s not action today or in the near future, that risk in the medium term goes up and up and up, and it requires sharper action, more abrupt action, and a bigger hit to the economy and obviously financial stability.”

Carney was asked about the continuing discussion on the prospect of “stranded assets” from fossil fuel companies, because the companies will never be able to use all known reserves available. He acknowledged that the scientific estimations, “which we take those as given,” say that “really only about a fifth or a third of all the oil and gas and coal reserves that are proven today could be burned and still be consistent with a so-called 2 degree world – a world with manageable climate change.”

Given these scientific estimations, the Bank of England governor thinks that ”what is important is that investors, banks, insurance companies, the general population, has the information they need in order to invest accordingly – to take a view on this question.”

This is yet another recent example of a conservative financial institution starting to take the consequences of climate change very seriously indeed, and willing to say so publicly. Moreover, in a speech to Lloyd’s of London insurers, he said that “climate change will threaten financial resilience and longer term prosperity,” if it is not addressed adequately today. He mentioned that he will be raising the issue at the next meeting of the G20 group of nations in November.

Image CC licensed by Policy Exchange: Mark Carney, Bank of England Governor

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